HC Deb 22 March 2001 vol 365 cc135-80WH

[Relevant documents: First Report of the Scottish Affairs Committee of Session 1999–2000, HC 59, and the Government and Scottish Executive's response thereto, Session 2000–01, HC 55.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Clelland]

2.30 pm
Mr. David Marshall (Glasgow, Shettleston)

I wish first to say how grateful I am to my colleagues on the Liaison Committee for agreeing to my request that the report be debated, not filed away like so many other reports. As some hon. Members are aware, it was due to be discussed here on Thursday 1 February, but the debate was postponed because of the ministerial reshuffle that took place at the time. The postponement has been advantageous to this debate because much has happened since then and many issues have moved on. A lot has changed.

We have had the statement on the uprating of the national minimum wage, the Budget and a new Secretary of State and Minister of State at the Scotland Office. I am particularly pleased to welcome to the Chamber my hon. Friend the Minister of State who will wind up our debate. Before he became a Member of Parliament, his role as the Scottish representative for Age Concern Scotland gave him a long-standing interest in, and experience of, many of the issues that we shall be discussing today.

As Chairman of the Select Committee on Scottish Affairs, I wish to express my gratitude to its members who represent all four major political parties and to the Committee staff for the hard work that went into the inquiry and the compilation of our report. I thank our two specialist advisers, our old friend Professor Alan McGregor of Glasgow university, and David Webster, a chief housing officer at Glasgow city council. Thanks are also due to those who gave oral evidence to the Committee, either formally or informally, and to those individuals and members of organisations who submitted memorandums or participated in our informal visits to many parts of Scotland and in our short visit to Finland.

We announced our inquiry in February 1999 because we were only too well aware of the tragic consequences of poverty and deprivation for society in Scotland and the desperate need to tackle its causes and effects. It was also clear to us that, as the inquiry was our first after the establishment of the Scottish Parliament, although we would try our best to stick to reserved matters, there would inevitably be overlaps with issues such as health, housing, transport, the environment, crime, drugs and law and order, all of which are devolved to the Scottish Parliament. However, that gave us the opportunity to co-operate with the Scottish Parliament and the Executive and to comment on the practice of joint working.

It was inevitable that there would be some cutting across the remit of other Select Committees and I express our thanks to the Select Committee on Social Security, in particular, and its Chairman, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), for the way in which we were encouraged to conduct our inquiry in respect of social security matters. We took a great deal of evidence in the House and I wish to highlight the input from my right hon. Friend the Member for Birkenhead (Mr. Field), Professor Peter Townsend and Professor Mark Shucksmith, all of whom gave us invaluable evidence. We were especially grateful to Wendy Alexander, a Member of the Scottish Parliament, then Minister for Communities in the Scottish Executive. She was the first Scottish Parliament Minister to appear before a Select Committee, and her evidence was extremely helpful to us. She co-operated fully in every way.

Much can be learned about the theory of poverty sitting talking about it here in the Committee Rooms of Westminster, but we realised that we had to go out into the community, talk to those affected by it and see the situation at first hand to appreciate fully the horrible effects that it has on less fortunate fellow human beings. We talked to people who, in usual circumstances, would not appear before a Select Committee, either formally or informally. For example, we visited the Wayside club in Glasgow, where we met people who were homeless and rough sleepers, who had particular problems. However, they were prepared to talk to us. Many members of the Committee were impressed that some of the people we met cared about the problems of others, although they had problems themselves. For example, one of the first questions asked by The Big Issue sellers in Glasgow was what we were doing for those who were not as fortunate as them and who did not have The Big Issue to sell. That took us all aback, but they are experiences that are remembered with a degree of pleasure.

We had to conduct the inquiry with proper sensitivity and respect for the dignity and feelings of people, and without stigmatising any of the areas that we visited. I hope that we achieved that, and I am grateful to all members of the Committee for the way in which the inquiry was conducted.

It is not a crime to be poor, but it is a crime committed by society if it chooses to do nothing about poverty in this day and age. I congratulate the Government, particularly on bravely setting the target to eradicate child poverty in 20 years. No other Government have had the courage to set such a target, and I sincerely hope that the target will be met several years before the target date.

On a personal note, the inquiry took me back to my roots, which I hope that I have never forgotten. I was unlucky enough to be homeless until I was 23, and I went to 12 or 13 different schools—I cannot remember the exact number. I wore hand-me-down clothes, and sometimes I had to live with friends when my mother went into hospital for treatment, as she frequently did because she was badly crippled. For about six months, I lived in Blinkbonny in Falkirk, which is the local poor house. Believe me, it is not a nice experience to go to school in such a situation.

I left school at the age of 15 and spent some time during the next few years penniless and unemployed. That experience returned to my mind repeatedly during the inquiry, especially when we spoke to the young people that we met, such as The Big Issue sellers. I had hoped that the passage of 40 years would have changed the situation. In some ways it has changed, but not necessarily for the better. When I was young, we did not face such problems as drugs, or the other pressures that exist today.

Some commentators refer to poor people as the underclass. I find that a horrid word. Such people are our fellow human beings and citizens, and I hope that the word will disappear rapidly from everybody's vocabulary.

Our report was published on 19 July 2000, just before the summer recess. The response of the Government and the Scottish Executive was received in memorandum on 4 December and published on 18 December as the first special report for the current Session. It is best summed up by quoting from Glasgow city council's development and regeneration service department's analysis of it, which said: The Report is to be welcomed as a thorough and authoritative overview of poverty in Scotland, its causes and consequences. I am grateful to Roger McConnell, the director, for those remarks.

When conducting the inquiry, the Committee made a detailed review of the extent of poverty in Scotland, its causes and consequences. We examined the Government's response to poverty up to that time, including the role of benefits, actions by the Scottish Executive, the role of local government and the voluntary sector, and joint working arrangements. We drew conclusions, or made recommendations and suggestions about the provision of data, or lack thereof; rural and urban poverty; activities of licensed credit brokers; the promotion and expansion of credit unions, money advice centres and projects; the minimum income guarantee for pensioners; linking the state pension to changes in average national earnings; take-up targets for the Department of Social Security to encourage benefit advice and the take-up of benefits; the appointment of a Minister for the elderly; increasing the earnings disregard for disabled people; introducing a proper measure of income adequacy; adjustments to the new deal; job creation schemes; making more information available about the joint ministerial committee on poverty; and a request for formal meetings between Select Committees and Committees of the devolved Assemblies. Those are not all of the issues, and no doubt colleagues will refer to others that I have not mentioned.

The response of the Scottish Executive came as a welcome surprise to us and was warmly received by the Committee. Rather than telling us to mind our own business—which they may have been entitled to do—it was clear that our report had been well received, carefully considered and, even more importantly, acted upon in a positive way. I give the Scottish Parliament and Executive credit for the constructive and helpful response to the numerous suggestions we made, especially on matters such as homelessness; health inequalities; money advice and debt management; transport costs and living allowances for island and remote areas; cold damp homes and fuel poverty, and concessionary travel. Anyone reading the response cannot fail to be impressed, and the Executive's action since then shows that they are tackling the problems that have been handed down, and that devolution is working to the benefit of people in Scotland.

Turning from devolved to reserved matters, I need not remind colleagues that the legacy of 18 years of Tory government is that some of the most deprived communities In Europe live in Scotland. The west of Scotland has suffered particularly badly, with approximately 50 per cent. of deprived areas located in the city of Glasgow. Life expectancy is three to four years lower in Scotland than in the United Kingdom as a whole. The main cause is well-known—massive unemployment resulting from the destruction of our traditional industries and our manufacturing base since 1980, by Mrs. Thatcher and her friends, although it is almost impossible to find a friend of Mrs. Thatcher now.

Mrs. Eleanor Laing (Epping Forest)

I am one.

Mr. Marshall

Guilty. The hon. Lady is courageous to say the least.

To be frank, my first reaction to the Westminster Government's response was disappointment, because it was more of a holding reply and less positive than I would have liked, but a lot has changed since then. Much water has flowed under the bridge, and it is fair to say that when our inquiry was conducted and the report was published things were starting to happen. Joint working arrangements and spending priorities were being considered, structures were being set up, and much of the planning process and the necessary actions were in the pipeline. Perhaps the timing was one of the reasons for that.

A great deal has changed for the better since our inquiry started two years ago. I have often said that nothing concentrates the minds of Ministers and civil servants more than a Select Committee announcing an inquiry and they realise that they will have to respond to the questions that arise. Even though the initial response is not necessarily to accept or agree with conclusions of Select Committees, it is remarkable—though probably purely coincidental—that many of the recommendations eventually come to pass. That is one of the greatest benefits of Select Committees.

Tremendous credit must go to my right hon. Friend the Chancellor of the Exchequer, not only for his anti-poverty measures in the United Kingdom, but for his global leadership in tackling poverty and debt among the world's poorest nations. We talk about poverty in Scotland but the concept is relative. One should travel to some third-world countries. I have never been to Mozambique but—goodness knows—we are not comparing like with like when we talk about poverty in our country and in countries such as Mozambique. It is to the Government's credit that my right hon. Friend is probably the recognised world leader in attempting to help the rest of the world in that respect. I am sure that my hon. Friend the Minister of State, who was a successful Minister in the Department for International Development, will confirm that in his closing remarks.

The Labour Government have turned the problem around. They have made a substantial difference. The Scottish economy is performing strongly and unemployment is at the lowest level ever recorded, while the number of people claiming unemployment benefit is the lowest for a generation—since the days of the last Labour Government. We are embarking on the biggest post-war hospital and school building programme. For example, Glasgow is rebuilding all its secondary schools to give state-of-the-art educational facilities to all its pupils.

My role in opening the debate is mainly to explain the background to the inquiry, its nature and extent, and to set the scene for the debate. I have raised many issues, but there are others that I have not mentioned. I have also refrained from quoting figures and statistics. I expect subsequent speakers to do that, and to raise new issues. However, I wish to flag up several points, which I hope will be considered by the appropriate Ministers.

With regard to the lack of adequate statistics, I am grateful to my hon. Friend the Minister for his extensive written reply of 23 February to my parliamentary question. It was 17 pages in length, and it quoted statistics for every Scottish constituency on benefits, families, pensioners, unemployment, winter fuel payments and other subjects.

It is important to collect useful, accurate and up-to-date statistics, especially on poverty matters. Such information is neither useless nor a waste of public money. It is necessary in order to do the job properly. The lack of such statistics was one of the difficulties that the inquiry encountered. Many statistics are outdated; some are based on the 1991 census, although we are embarking on a new census. As those statistics are 10 years old, they do not even relate to the new constituency boundaries. It is even worse that statistics on matters such as poverty are not collected at all in some parts of the country. Given the cost of collecting them, that is understandable, especially in remote rural areas. However, it could be argued that they are even more necessary in such areas: it is alleged that there is great poverty in rural regions, but there are no statistics to back that up.

The Committee made several recommendations with regard to the new deal. The new deal has been a great success and we would like it to be even more successful. Therefore, I hope that the Government will reconsider our arguments for longer work-related options and for parity between the various programmes.

I hope that the promised Government review of consumer credit legislation will tackle the ease with which people can obtain substantial credit, frequently at excessive rates of interest. The methods employed by credit companies must be investigated. I do not know how some of them manage to stay within the law. It is also necessary to investigate interest-free credit arrangements whereby customers make a number of low payments followed by a substantial final instalment. If £1,500 is borrowed at interest-free credit for 12 months, the customer might pay 11 instalments of approximately £68, followed by a final payment of £750. If that sum is not paid on time, the customer will fall foul of the agreement, the small print of which might state that interest at a rate that is frequently as high as 30 per cent. is owed on the sum that was borrowed at the outset, rather than the sum remaining at the end of the year.

If that is the case, a letter might be sent, inviting the customer to pay low sums for the next couple of years. Therefore, instead of borrowing £500 interest-free for a year, the customer will pay many hundreds of pounds more, although I have forgotten the precise figure for this example. Finance companies know that many customers will not be able to afford the final instalment, but they encourage them to keep paying, and then to pay the extra interest, because they make fortunes out of such arrangements. That is sharp practice and it should be outlawed. I know about these matters, as I have entered into such an arrangement. Interest-free credit deals should be arranged so that people pay only a series of equal payments, rather than commit themselves to a large final payment.

Credit unions, money advice projects and citizens advice bureaux perform a valuable role to help people with money problems in my constituency. As debt is one of the major problems in contemporary society, along with drugs and crime, such organisations must be supported. They are making an increasing contribution to dealing with the problems that are caused by poverty, and they deserve more recognition.

I am angered by the negative coverage that my constituency receives. Opposition politicians who know better condemn the people of Shettleston. The east end of Glasgow was once the workshop of the city, but the selective overspill policy that built the successful Scottish new towns has created great problems for the area and its people. On top of that, they had to face 18 years of the ravages of a Conservative Government. Despite all that, a tremendous and excellent community spirit exists in all areas of my constituency. I get angry when I see the same old photos of derelict land and graffiti in the media. That is all that is portrayed. My constituents also get angry because they do not recognise the area in which they live in such portrayals.

Why do we never see photographs of Glasgow green and the People's Palace, which is a world-famous museum? Why do we not see the international rose trials held in Tollcross park, which must be one of the loveliest places in the whole city? Why do we not see the winter gardens, which have been recently restored thanks to a heritage lottery grant of —2 million? Why do we not see the —9 million Olympic-standard swimming pool, which is part of the east end leisure complex visited by many thousands of people each week? Why do we not see the new Gorbals leisure pool, which is a model of its kind? Why do we not see the multicultural, multiracial gala day held in Govanhill park, which involves the entire community? Why do we not see some of the enchanting school concerts, especially the annual concert by Quarrybrae primary in Parkhead, in which every child performs and does so brilliantly? Why do we not see the east Glasgow music festival in which a great variety of musical talent is displayed every year by secondary school pupils? Why do we not see some of the many social activities organised by pensioner groups in the area? Why does the media not have a good news week and cheer people up for a change, instead of knocking the area with all the depressing articles about people who are very kind and generous whenever there is an appeal or a good cause, and about people who have helped to build the wealth of this country but have been cast on to the dole or the slag heap as a result of the closure of traditional industries—steel, engineering, coal mining and the rest?

Of course there are problems in my constituency. There are problems in every constituency. However, the problems are being tackled. The blight and uncertainty caused by the future and the route of the M74 has gone away. The future of Celtic Park, which delayed the development of the Parkhead area for several years, has been resolved. Celtic now has one of the best stadiums in the world, as befits the first United Kingdom team to win the European cup, champions-elect of the Scottish premier league this year and potential treble winners. It is now building a team to match. I say that, and I am not even a Celtic supporter. It is an example to other clubs in the UK.

Health in the constituency is improving, despite periodical reports from academics that seem to show that merely to live in Shettleston is to take one's life into one's hand. I have stayed right in the centre of the constituency for 30 years, and I would not wish to stay anywhere else. I have good neighbours and one of the best outlooks in the city beside a park. It is a place to be proud to live in, and not as the media portray it.

Educational standards are rising. Last Friday, I attended an event at the John Wheatley college, which is named after one of my predecessors. He was the most famous Member to represent the constituency and the first Minister for Housing and Health in the 1926 Labour Government. I spoke to three sixth-year girl pupils from Eastbank academy. One of them is going on to Glasgow university and hopes to do research into AIDS and other diseases, one is going on to Strathclyde university and hopes to become a teacher, and one is going to the Glasgow College of Building and Printing to study photography and hopes to specialise in forensics. That is typical of the vast majority of young people in my constituency today, which is totally different from media portrayals.

For many years, Shettleston had the highest unemployment in Scotland, and was in the top 10 in the UK. The House of Commons Library figures for February show that it is now No. 9 in Scotland and No. 54 in the UK. From a high unemployment rate of about 20 per cent. under the Tories, it is now 7 per cent. That is real progress, and it is all down to the change of Government. The Tories wrote off cities like Glasgow. Labour cares and is proving it.

Rising employment, low mortgage rates, stability not boom and bust, the national minimum wage and its uprating, various Budgets and changes to taxation rates, various tax credits, winter fuel payments and pension increases have all resulted in most people becoming better off, over the lifetime of this Parliament, by several hundreds of pounds a year, and, in many cases, by thousands. No doubt colleagues will quote specific figures. As I said earlier, the Labour Government have made a difference; things have got better. Our record contrasts that of the Tories. To misquote Mrs. T yet again, they are no alternative.

Our inquiry and report were well worth while. I look forward to a constructive and interesting debate and, most of all, to the response of my hon. Friend the Minister.

2.55 pm
Mr. Andrew Welsh (Angus)

This is a major report on a crucial subject that the Scottish Affairs Committee studied in depth. It is to the Select Committee's credit that it chose such a complex and wide-ranging subject for investigation and recommendation.

I echo the comments of the hon. Member for Glasgow, Shettleston (Mr. Marshall) about the Select Committee's approach being always sensitive and respectful. That is how we should all approach the work to which the Select Committee directs us.

I also echo the hon. Gentleman's positive approach. Only by accentuating the positive can we deal with the problems and give people the decent future that I am sure that we all want for all our fellow citizens. All Select Committee members hope that our findings will be of some practical help to our fellow citizens and the people whom we met during our detailed investigation.

The statistics on poverty are bleak. More than one in five people in Scotland live in households on less than half the average income—that is some 1.1 million people. Even more worryingly, the number has risen by between 2 per cent. and 2.5 per cent. compared with 1979. Research also shows that in recent years the number of people on very low incomes has increased. Those people must always be our concern. Worse still, the majority of Scottish low-income earners earn less than 40 per cent. of average income and are at the lowest end of the earnings league.

More than 350,000 children in Scotland live in households on less than half the average income—almost a third of Scottish children. In such debates it is easy to get lost in statistics, but our Committee has always realised that we are dealing with real people and real life, and it is our duty to try to improve living standards for all of them.

We also know from the statistics available that one fifth of working-age families live in poverty, as do one quarter of our pensioners. That is unacceptable in one of the wealthiest countries in the world per head of population. The scale of poverty shows the challenge that faces both the United Kingdom and the Scottish Executives.

The consequences of poverty are well understood and documented. The National Society for the Prevention of Cruelty to Children states: Inadequate income causes stress, which exacerbates the health problems experienced because of poor diet, inadequate heating and poor housing. We are not here to dwell on other people's misery; I hope that we can cure the problem and give people the decent start and the chance in life that we all want.

According to the NSPCC report, Low benefit levels also increase the likelihood of family tension and breakdown which compounds the distress to children. The report also states: Most … children on child protection registers are from low income families … while … the most commonly identified stress factors in all registered cases of child abuse are unemployment and debt. Those are just some of the consequences suffered by those who live in poverty.

Such complex and difficult problems and demand a multifaceted response. There is no instant or quick solution. Present Government policies to deal with low income are built around the minimum wage and the system of tax credits for those in work, and minimum income guarantees through the benefit system for disabled people and pensioners. If those policies are to succeed in combating poverty and its consequences, people need to receive an adequate income from their pay, enhanced if necessary through the tax credit system or benefits payments. However, neither benefits, including tax credits, nor the minimum wage are based on an assessment of need. The European Commission recommended that all European Governments should set minimum income standards at a level considered sufficient to cover essential needs with regard to respect and human dignity".

The Minister of State, Scotland Office (Mr. George Foulkes)

Will the hon. Gentleman confirm that he and his Scottish National party colleagues were not even here to vote when we passed legislation on the national minimum wage?

Mr. Welsh

I know that the Minister cannot let such an opportunity pass by, but the Scottish National party has always supported a national minimum wage.

Mr. Foulkes

Where were you?

Mr. Welsh

If the Minister wishes to reduce the debate to petty party politics, he is entitled to do so, but it is out of place. We are discussing a subject that is crucial to everyone in Scotland. The Scottish Affairs Committee has produced a consensus report. The Minister is not on the Committee, and perhaps he dopes not believe in consensus reports, but all Committee members have together produced recommendations that I hope that his Government will implement. If he must lower the tone of the debate, he can go ahead, but I will not join him. I join my colleagues in support of the recommendations and if the Government listen to them, our people will be better off.

Mr. Foulkes

Where were you?

Mr. George Stevenson (in the Chair)

Order. The Minister has made his point and the hon. Member for Angus (Mr. Welsh) wants to proceed with his contribution.

Mr. Welsh

The point is that I serve in two Parliaments, whereas the Minister serves in only one. All hon. Members, including Members of the Scottish Parliament, know that it is not possible to be in two places at once.

The minimum income standard was proposed, not as a guarantee of minimum income. but as a benchmark or standard against which earnings, benefits and pensions could be judged. The European Union is now seriously considering the matter, but it has not yet received any contributions from the Scottish Parliament. I hope that the Minister will encourage his colleagues in Scotland to contribute to the European measures to improve conditions for people throughout Europe.

Targets for the elimination of poverty are meaningless without a measurement of need, and the lack of such measurement is a fatal flaw at the heart of our efforts. There must be a measurement to allow us to set targets that can raise living standards. The Committee report recommends that the Government should have a proper measurement of income adequacy. Unfortunately, the Government do not accept that there can be a single research method that could calculate a minimum income standard for all families. I suggest to the Minister that by commissioning a study using existing research by the family budget unit at King's college, London and the Scottish poverty information unit, the Government would demonstrate fairness and a commitment to overcoming poverty.

In addition to implementing general policies, the Government must look at the specific victims of poverty—in Scotland one quarter of them are pensioners. The Department of Social Security argued that overall, pensioners have done relatively well during the past 20 years or so. However, the evidence that the Committee received suggested that many pensioners struggle on a miserable income or live in the shadow of uncertainty about their long-term care in old age. Scotland's pensioners deserve respect and a decent standard of living after a lifetime's work.

Some 41.1 per cent. of all income support claimants in Scotland are pensioners, which means that about 172,000 must rely on state benefits to supplement pensions. Pension provision must therefore be the key element in tackling pensioner poverty and in meeting the needs of the Scottish people. The minimum income guarantee, free television licences for those over 75 and the winter fuel payments to pensioners are the Government's chosen vehicles to eradicate pensioner poverty. However, the minimum income guarantee relies on pensioners applying for income support by filling out a 100-question, 40-page form, which even asks whether they are pregnant—a strange question. It is of little surprise that between 21 and 32 per cent. of pensioners who are entitled to income support do not claim it. The Government must consider how they could further promulgate advice to pensioners to maximise the take-up of benefits. Local government could be a valuable assistant in complementing the Government's actions.

Our report recommends a simple practical step: to ensure that a full benefits check is offered to those of retirement age and that they are encouraged to take up that offer. That would help many people in Scotland. If a serious attempt is to be made to alleviate pensioner poverty, the process must be simplified, but the minimum income guarantee would not lift pensioner incomes above 60 per cent. of the median income after housing costs. If we are serious about wanting our pensioners to be able to live free of care and with dignity, we must direct attention to the universal state pension. The Government must consider linking the state pension to the increase in average earnings. As the report states, the resulting extra income would reduce the need for benefits and the accompanying claim forms, and would overcome some of the time and effort required to administer the minimum income guarantee. It would allow the Exchequer to receive the extra tax from more affluent pensioners and enable the increasing wealth of a prosperous society to be shared by the elderly. The Select Committee also recommended other measures to benefit the elderly and I encourage the Minister to implement them.

Those living in rural Scotland comprise a particularly vulnerable group who do not have to seek trouble. According to Wendy Alexander, former Minister for Communities at the Scottish Parliament, a quarter of the 1.1 million people in Scotland who are living in poverty live in rural areas. Higher transport costs, low-paid jobs and a higher cost of living are all reasons for poverty being a particular problem in rural communities.

Our report recommends that the Scottish Parliament should watch the cost of sea ferries and seriously consider the innovative scheme proposed by the hon. Member for Western Isles (Mr. Macdonald) to enable the proposed new highlands and islands transport board to sell petrol that it has bought in bulk on the open market direct to retailers. The savings would not be huge, but they would help to offset the higher price of petrol in rural areas. There is no quicker way to lower living standards and quality of life throughout Scotland than raising petrol costs. Anything that reverses that would be of great assistance to everyone in those areas.

Even greater inroads could be made into tackling rural poverty if the Scottish Parliament would consider introducing and financing a remote living allowance. It is disappointing that that has been ruled out because such a scheme would effectively compensate for the higher cost of living.

The issues in our report are of enormous importance and have implications for both devolved and reserved policy areas. I have been able to address only a few of the many issues covered by the report, but it is clear that much must be done to tackle what has openly been described as the biggest scar of a civilised society". The Scottish Affairs Committee has made a serious attempt to investigate poverty and to recommend practical solutions. The United Kingdom Government and the Scottish Parliament should not only take note of our recommendations, but set about implementing them. The report goes some way towards addressing the acute problems and if the Government fail to take notice, they will be judged by that failure.

I am the longest serving member of the Scottish Affairs Committee and I am making what may be my last speech here as we head towards a general election. That gives me the freedom to say what I like. It has been an honour to serve with Chairmen present and past and with colleagues throughout the years. I retire undefeated from Westminster to concentrate on my work in the new Scottish Parliament and I would like to thank the Clerks and officials who have served our Committee and Scotland well over the decades. At the end of this Parliament, our report on an important subject is a substantial legacy to leave as a guide for action on behalf of a major sector of the Scottish people. I wish all my colleagues well, whatever the future may bring.

3.8 pm

Mrs. Irene Adams (Paisley, North)

First, I congratulate my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) on pressing for this debate. I also congratulate him on his speech. His insight into poverty and his description of his background has helped the Committee, and no hon. Member could have stood the inquiry in better stead. He has been superb throughout in pointing us in the right direction and we have been lucky to serve with him.

I do not have many notes and I do not intend to use a lot of facts and figures. If I cannot speak about poverty from the experience of my background and my constituency, I should not be here. Unlike my hon. Friend, I never suffered homelessness, but I came from a poor home. It was poor in money, but not poor in spirit—it was a stable, happy home. However, I should not like hon. Members or those who read my remarks to think that it is the norm for people such as me and my hon. Friend to end up in a job such as this having started from where we did. We are the exception that proves the rule, not the people who make the rule. Nobody should run away with the notion that anyone from our background can get here. They certainly cannot—it is very difficult indeed

I start where we started when we produced the report, by asking what poverty is. Poverty is not always due just to lack of money; it can also be due to lack of opportunity. As a child, poverty was mostly clearly spelt out to me at my grandfather's knee. In 1926, he came to Westminster, not to serve as a Member of Parliament, but to knock on doors with other hunger marchers. He came here three times and was thrown back on a train to Glasgow. He was quite glad about that, because he had walked all the way here. He left school at 14, forged his birth certificate in order to join the Army, and served for four years in the first world war, having been a boy of 15 when he went to the trenches. He was wounded three times and gassed, and was twice sent home and returned to the trenches. He joined as a regular soldier, then served in India and Ireland—although he was not allowed to serve much in Ireland because he was of the wrong religious persuasion, and was often sent back to barracks.

My grandfather then married and had his family. Throughout the hungry 1920s, he often walked 15 miles a day for work. In those days, parish councils paid people's relief. His parish council was Greenock, but he had gone to live in Paisley. Therefore, to receive his parish money every six weeks he had to do six weeks' work in Greenock. He had no bus fare to get there, so he walked the 15 miles from Paisley to Greenock in the morning, did his 10 hours at Tate and Lyle—the sugar—house—and walked back 15 miles in the evening: not an easy task. Throughout the 1930s, he had jobs on and off. In the late 1930s, he went back to the Army, and served in Orkney and Shetland during the second world war. After that, in the early 1950s, he got a job in the shipyard. I was brought up by my grandparents, and I remember him working there. When he was in his early sixties, he had an accident in the shipyard. A plate buckled and fell on his leg, practically crippling him. He received from his apparently unappreciative employers the grand sum of £50 in compensation for a life's work for his country.

Mine was a rich childhood in terms of hearing such stories from my grandparents. We had no money at all, but I never suffered poverty of opportunity, because they ensured that I had every possible opportunity. They also instilled in me the need to learn and achieve as much as I could at school. Not every child in my circumstances had someone like my grandfather with a huge personality to push them on their way. That remains true today. Children born into such backgrounds are too dependent on meeting one person along the way who will set them on the right road. That should not be happening. As a society, we should be ensuring that all children are set on the right road and have the opportunity to do what they want to do in life. The Government have begun to put children on that road. It will not be an easy task, but the Government tackled it early on, and I hope that they will continue to do so.

By the time that I had my own three children, I hoped that things would have changed, but each time that I was in the maternity hospital I was able, sadly, to pick out the children who would succeed in life and those who would fail. Mine is a small community, and I have been able to watch a lot of them grow up. To my eternal sorrow, I was absolutely right. Their fate was predestined, and that should not be so. If we as a Government cannot tackle that, we are not doing all that we should. However, the Government have taken 1.2 million children out of poverty, which is a good first step on the ladder.

Children who are born into such backgrounds experience poverty in a wide variety of ways. If there is not enough money for the electricity meter by a Thursday night, they have to sit in the dark with no supper, but they also have no heating or hot water when they get up on Friday morning. As a result, they do not smell too nice when they turn up for school; they are also tired and hungry and unable to attend to their morning lessons. That is the poverty faced by people at the bottom of society in this country. I agree that such poverty does not compare with the absolute poverty of the third world, and we should not forget that, but the poor in our society are 100 per cent. poor, and it is sometimes worse to be poor in a society such as ours. Here, the poor are surrounded by riches to which they and their children do not have, and never will have, access.

It is no wonder that it is easy for people from such backgrounds to drift into crime. I am not arguing that the poor always become criminals, but someone who is poor is more likely to go down that road than someone who is not. Poverty also leads people into drugs, which has been a sad blight on our society in the past 10 years. Sometimes, one has to forget the circumstances in which one lives and what better than to take the odd upper or downer? To begin with, the drugs are offered for free, and then at a low price, until one is hooked. As a result, the children of such parents are in an even worse situation—indeed, the worst of all. They must not only combat all the experiences of poverty, but cope with a parent who is out of it. Such parents are out of touch with all that is happening in society, and they end up providing little in the way of care for their children.

Such people get caught up in debt, which rules the lives of those in poverty. As the report demonstrated, often debt is not illegal but owed to reputable companies. In the light of one case involving a well-known company—we decided not to name it because it was far from alone—one might ask how reputable such companies actually are. We discovered that a loan of £500 from that company incurs an interest repayment of £310. In other words, one would have to pay back a total of £810 on a £500 loan. Often, people will get half way through such a loan and start to miss a few repayments, so the company says, "That's OK, we'll offer you another loan to repay the first one." A further loan of £500 would enable repayment of, say, £50 outstanding from the first. That would leave £150, but one would still have £800-worth of debt. On and on the circle goes, and such people go ever deeper down a spiral of debt from which they can never escape. I am delighted that the Government are to undertake a long-overdue examination of credit controls. It is certainly the people at the bottom of the pile who are being ripped off.

Like my hon. Friend the Member for Shettleston, I am pleased that the Scottish Executive responded so quickly. I say that as a great supporter of devolution. It proves how much we needed a Scottish Parliament. We have three hours here today to debate poverty in Scotland, but it is a subject that requires much greater debate. There are people in this Parliament who recognised the need for another Parliament that could take time to look at such issues. Many of us here get sick of people asking us what we do now that there is a Scottish Parliament. The whole point of having one was to provide another chamber in which to discuss the things that we never had time to discuss here.

The Scottish Executive are in their infancy and have had problems. They will make mistakes, but we all do that. Mistakes are made even in this Parliament, which is of such great age. The problems will iron themselves out. The Government have tried desperately hard to tackle poverty, and are still doing so. I hope that they will continue, because we cannot let our children down for ever. Many children today are born at the bottom of the ladder, because the upper middle classes are not having as many children as they once did. It is up to society to look after those children, and we are the poorer if we do not. They are all our children.

3.21 pm
Sir Robert Smith (West Aberdeenshire and Kincardine)

I am pleased to follow the hon. Member for Paisley, North (Mrs. Adams). Like her, I welcome the fact that the Scottish Parliament is finally providing the forum for proper debates on issues that affect poverty in Scotland. The Select Committee had chosen the subject of its inquiry before I joined it, and I was pleased to be able to participate. I join in the thanks that have been offered to its Chairman, the hon. Member for Glasgow, Shettleston (Mr. Marshall), and to other members of the Committee, for the work that they have done.

It is possible, constitutionally, that there will be a general election soon. There has been a debate in the press on the thoughts of a party—one that might be elected—on what will happen to the Scotland Office. In such a debate, we must not lose sight of the need for scrutiny of the reserved matters that affect Scotland. Ministers of all Departments might be tempted to think that, as there is now a Scottish Parliament, they no longer need to worry about Scotland. However, they do need to consider Scotland where reserved matters are concerned. The inquiry might have helped to remind Ministers in the Departments responsible for reserved matters of that, and to refocus their minds.

The inquiry will not be the last one into poverty in Scotland. Tackling poverty is a long, hard job. The inquiry has helped to focus minds, enabling us to begin to tackle the problem, but one Select Committee report cannot provide all the answers. However, we have raised important issues, stimulated people, and provided those who gave us evidence with a forum in which to have their voices heard in Parliament and their concerns placed on to the agenda. Like the Chairman, I was impressed by the witnesses and their evidence. I remember in particular the evidence of some pensioners who took over the Committee, welcoming and introducing themselves to it before the Chairman had had a chance to speak.

It is also important to go out and meet the people who will not come here and give evidence in a formal setting. They need a chance to have their voices heard by those who can influence reports and decisions, and bring their concerns to the attention of Ministers.

The Scottish Executive's response was positive and pleasing, and recognised that the establishment of the Scottish Parliament should not end all dialogue between Westminster and Edinburgh. It is important not to tread on each other's toes, but it is also important to keep working together. The hon. Member for Paisley, North pointed out the need for someone to get children on the right road. We need such a person in education, which is a devolved matter, and the Scottish Parliament must ensure that someone breaks the cycle and helps young people to make the most of their potential.

The Chairman mentioned that the economy is picking up, but we must test our strategies and policies in the light of events in the United States because there may be a more difficult economic climate in years to come, which will be the real test of how effectively we are tackling poverty and its causes. I welcome the report's recognition of poverty as a major issue not only in the urban areas that have been identified in the past, but in rural areas. The hon. Member for Paisley, North discussed living in poverty in an area where others do not. Obviously, poverty anywhere is a serious problem, but we must recognise that added dimension in the light of the widening crisis in the rural economy. Foot and mouth disease has affected not only farmers, but small businesses that relate to the tourist industry. The Government must recognise the problems in rural life.

Foot and mouth disease is linked with the impending general election that may or may not happen. My wife keeps saying, "I told you four years ago that the election would be on 3 May 2001." However, I do not think that she is privy to the private thoughts of the Prime Minister. We would know when we were working if we had fixed-term Parliaments. If the foot and mouth crisis happened in the fifth year of such a Parliament, debate about the date of the election would be academic unless there was a major constitutional crisis. We would not be in this pre-election purdah if the Prime Minister had said from the outset that he would serve for five years.

As a Member of Parliament, one issue connected to rural life and poverty that is proving difficult to tackle is the future of our post office network. Liberal Democrat Members wanted to meet the new post office regulator, but because the Budget was moved from Tuesday to Wednesday that was not possible. The regulator now says that he should not attend meetings with representatives of political parties because we are close to a general election. Effective political scrutiny will be closed down if we do not clear the air about the date of the election. The future of rural post offices is extremely serious because they are part of the social network that helps pensioners to link up with and obtain access to facilities in their communities. Rural shops tend to be supported by rural post offices; if the post offices go, the shops will follow. There have been few signs that that problem is being tackled.

The Government have gone for the means-tested approach to pensioner poverty. My party has attempted to impress upon the Government that if they pay a greater pension it will reach all pensioners, which means that the poorest will not have to make a claim. We have also highlighted the fact, which is supported by the evidence of the right hon. Member for Birkenhead (Mr. Field), that older pensioners tend to be poorer pensioners. If a major pension increase were targeted at older pensioners it would reach them immediately.

I have tried to improve the take-up of the minimum income guarantee in my constituency by putting out literature advertising the helpline. I have also arranged special surgeries to encourage people to come for advice, and I should like to thank the Benefits Agency for its support and hard work. As the hon. Member for Angus (Mr. Welsh) said, the minimum income guarantee form is challenging, and, in reality, is an income support form with a new cover. I understand that the Government are discussing bringing in a smaller form tailored to the needs of pensioners. It would be helpful if the Minister would outline the progress that has been made and when it will be introduced. I sat at home before one of my surgeries thinking that I should get to grips with that form. When I examined it I was glad that Benefits Agency staff were attending the surgery to give advice because I would not have been able to help. However, that does not mean that people should not be claiming. Indeed, the Government may send out a wrong signal in trying to tackle that problem. My contention is that the poorest pensioners in our society are those who are entitled to the minimum income guarantee but do not claim it. Unless we tackle that problem urgently, we will be letting down those people badly. The message that I try to get across is that society wants to support our pensioners and to ensure that they have a proper retirement. Therefore, claiming the minimum income guarantee should not be stigmatized—it is their entitlement. Society has voted on that through Parliament, and it is there for pensioners to claim.

I am slightly disappointed about the timing of the Government response. The Select Committee published the report in July, but there was no response from the Government until December. I hope that the new brooms in the Scotland Office will sweep more quickly when responding to future Select Committee reports.

Mr. Foulkes

I am sure that the hon. Gentleman is right about the new brooms, but I remind him that Parliament was in recess for about two and a half months between the publication of the report and the reply.

Sir Robert Smith

I thought that the Government carried on over the summer; I did not realise that they went into recess as well as Parliament I thought that the Government still tried to run the country during that time, but if I am wrong, I stand to be corrected. If that is so, perhaps the policy of less government could carry on throughout the year, rather than only during the three summer months.

Paragraph 33 of the carefully worded reply refers to Winter Fuel Payments of £200 this year for households". It is my understanding that next year's winter fuel payment will be £150. It is important to get that across to people. The Minister indicates that that is not the case, which is interesting, because that does not chime with what others have said. It would be helpful, therefore, if he could make it clear when he replies to the debate that the payment will not drop to £150 next year. That would provide welcome reassurance for people who are budgeting for their expenditure next year, especially as we have had such a bad winter this year.

I want to deal with the concept of to take-up, because the Government have gone down the road of means-testing with the working families tax credit. That involves encouraging people to get involved in the system and to fill in forms. The part of the report that particularly needs to be taken on board is the part that deals with the need to ensure that people receive advice. The reality on the ground is that advice centres in many areas are suffering cuts as a result of local government settlements and the problems and challenges facing local government. It is in the interests of the Benefits Agency that there is effective funding from the centre. The Government should ensure, through whichever Department—perhaps the Department of Trade and Industry—that advice and resources reach citizens advice bureaux and that people receive information. Obviously, well-informed people mean effective take-up. In addition, if people are better informed, less goes wrong with the benefits system and the Benefits Agency.

It is also likely that fraud would be reduced if people knew what they should be doing. Quite a lot of problems with benefit claims result from people thinking that they are doing the right thing when in fact they have misunderstood the system. I received some statistics for July 1999 from the Library. Of appellants who were at social security appeals tribunals by themselves, 44.9 per cent. were successful. With a representative to help them, however, 57.2 per cent. were successful. Having a representative makes quite a difference to outcomes and how well people do. We are dealing with benefits and people on the margins, so if they are not successful at appeal, that really hurts. Perhaps it should be worrying that 38.5 per cent. of all appeals are successful, because that suggests that we need to improve some of the earlier decision making. Those who appeal are probably the tip of the iceberg. Not everyone goes to appeal; many may feel that they are not entitled to a benefit and just walk away.

I am also concerned that the Government have reduced the ability to backdate claims at times of bereavement or other major family change, when people are not necessarily able to focus on paperwork and bureaucracy because they are focusing on coming to terms with what has happened in their lives. The Government should regret that and consider whether there should be more flexibility. If a person is meant to receive a benefit, the fact that he does not claim it does not mean that society has not seen his need for it.

That brings me on to the services that we provide. I say again that the Benefits Agency staff whom I saw were extremely dedicated in trying to help people. I particularly welcomed the fact that when someone came into the office but was not likely to be successful in claiming the minimum income guarantee, the staff might instead spot that he had a severe disability and ask whether he was receiving other benefits. That helps people: they might come in through the door for one benefit, but go out with another.

The computers that support the Child Support Agency and the Benefits Agency are a disgrace. A colleague looking over the shoulder of someone using the software for jobseeker's allowance noticed that a worksheet with workaround No. 155 was being used to deal with software problems. The computers had green screens, which some of us might remember from our university days, before we could afford proper modern screens. The Government are starting to talk about providing money for computers. The public service and major corporations underestimate the challenge of using new technology. Effective investment is required to get it right. Computer system failures mean that those who are most entitled to benefits do not receive them.

The credit system and the manner in which people are lured by interest-free credit is appalling. It used to be that a discount would be given to anyone who offered cash for goods that were offered on credit. There are no discounts for cash now, but deals that lock one into paying a lot of extra interest.

Another group that falls through the net is students. The problem first arose under the previous Government. I have never understood why students who fail to get a job in the summer months when they are not in education and have no means of support should fall through the net. We need to re-examine how we treat students and young people who receive housing benefit or other forms of support.

An issue that was rammed home to members of the Committee during the Western Isles visit is transport costs. It almost seemed that someone had briefed everyone on what they should say to us. I know that that was not the case and, therefore, how serious the issue is. The Western Isles is an extreme case. Those of us with rural constituencies know that transport costs are a problem nearer to home, but the Western Isles strongly highlight the difficulties. The mantra elsewhere is "education, education, education", but it was "transport, transport, transport" in the Western Isles during our inquiry into poverty. That is a challenge for the Government.

The Government emphasise work for those who can and security for those who cannot. A lot of the talk, action and initiatives centre on work for those who can. It is extremely important to encourage people who can to work, but there will still be those who cannot work who need security. Whoever is in power after the election—whenever it takes place—will have much to do in that area. The social fund's cash limit is a serious challenge. It is farcical that in some areas, at the wrong time of the year, people cannot get the grants or loans they need, whereas in another area they might be able to. Housing benefit still needs to be addressed.

Overall, we need to examine how we assess the adequacy of benefits. Water and sewerage charges are going through the roof in Scotland. They are increasing dramatically because of past under-investment and the need to catch up. However, that does not play properly when it comes to benefits uprating. Water and sewerage charges must be paid. If they have increased by 10 or 15 per cent. but benefit has increased by only 3 per cent., the crunch is on. We need to re-examine how we define long-term benefit levels, especially for those who cannot work. The benefits system is still as it was in the days of the safety net, catching people between jobs. Some need support for a longer period.

The issue that frustrates me most is that of medical assessments for incapacity benefit and disability living allowance. The examples that we hear from colleagues about the number of successful appeals may be anecdotal, but there is a genuine sense that something is very wrong with the system. The National Audit Office is now reviewing its operation. I do not understand why some people are refused at the first hurdle. One person who had had his joints replaced because of a wasting joint disease was told by the benefits assessor, "You should be going back to work," but his surgeon said, "If you go back to work, you'll be back on my operating table and I will have to replace your joints." They may have been able to pass the tick-box test, but the long-term prognosis was not good. In that particular case, by the time that the appeal was won the person had died, and it was the widow who got the results of the successful appeal. That brought home to me the need to be far more sensitive when we deal with medical appeals and assessments. We must recognise that at the root of all these policy suggestions are individual people who are affected by our decisions.

3.40 pm
Miss Anne Begg (Aberdeen, South)

Listening to the comments by my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall), I was reminded of my own childhood. I cannot compete in the poverty stakes. I grew up in a household in which I was secure and warm. I do not know whether we had a lot of money, because that was not something we were conscious of. We did not have a car, telephone, washing machine or a fridge until my mum went back to work when I was eight, which brought more income into the house, but it was a secure and loving home. The amount of money that family had was not something of which I was aware. My father worked seven days a week and that seemed to bring in enough money.

I was reminded of one of my first political experiences, which has helped to influence why I am here, sitting on the Labour Benches. The house that I lived in for the first 16 years of my life was a two-bedroomed council flat. It was a Wheatley house, one of the first council flats in Brechin. In my street there were two blocks of those flats and, a few years later, a whole housing estate was built to the same design—presumably to the same architect's plans—in what was called the "bottom end" of the town. The hon. Member for Angus (Mr. Welsh) will know them well, because they used to be in his constituency.

I remember a friend from school taking me into her house, which was the mirror image of my house. As I said, mine was a warm, loving home. We did not have fitted carpets, central heating or double-glazing in those days, but we had beautifully polished linoleum with rugs and nice, well-kept furniture. My mother is still incredibly house-proud. As I walked into the mirror-image of my house, I was struck by the contrast. There was no carpet or linoleum on the floor of the hallway. In the living room there was a bit of linoleum, one seat and a broken settee. As we walked down the hall I looked into one of the bedrooms and noticed that the floorboards had been lifted and used as firewood. The poverty in that house—not merely in terms of the amount of money coming in, but the poverty of spirit and opportunity and of my classmate's aspirations—was so evident that it had a fundamental effect on how I perceived the world from then on. It made me realise how lucky I was and helped to influence my belief that it is crucial for any Government to deal with the problems caused by poverty. Poverty can devastate people's lives and grind people down. Even with a good education and health service, the low expectation is such that people living in poverty will never be able to lift themselves out of the cycle of deprivation.

I was glad when the Scottish Affairs Committee decided to look at the issue of poverty in Scotland because, when we were deciding what our next subject for investigation should be, there was some debate as to whether the Committee should exist at all. What was the point of a Select Committee on Scottish Affairs when everything Scottish had gone up to the Scottish Parliament? Those of us on the Committee argued strongly for its existence because there is still a great deal that is relevant to Scotland that is part of the reserved matters. My hon. Friend the Minister will put me right if I am wrong, but 55 per cent. of the budget spent in Scotland is still controlled by Westminster. Only 45 per cent. of it is at the disposal of the Scottish Executive. A great deal can still be done. A huge amount can be done by the Westminster Parliament to alleviate poverty, because social security, pensions and the tax system can make a fundamental difference to people's lives.

When I talk about poverty and people realise that I am a Member of parliament for Aberdeen, they say, "Aberdeen is really affluent. Why on earth do you have an interest in poverty?" Yes, we in Aberdeen are lucky. We have a vibrant economy. The oil industry is going especially well at the moment, although I could not have said that two years ago. There is a huge amount of new investment in the North sea. We have one of the lowest unemployment rates in the whole of the United Kingdom—well under 2 per cent. in my constituency and falling. It is a well-heeled, affluent area, but it has pockets of poverty and deprivation. As my hon. Friend the Member for Paisley, North (Mrs. Adams) said, that can often make the poverty seem worse. If a person lives in an affluent society, what he fails to have is shoved in his face every day.

My constituents who are unemployed in an area of low unemployment face difficulty. If they cannot get a job, what does that say about them? If jobs are available, there is a skills shortage and people are crying out for people to work for them, but if they still cannot get a job, it reflects badly on them as individuals. That can cause psychological problems, which is perhaps why such people suffer stress and depression. If they could get themselves into work, out of poverty, many such problems would be alleviated. However, many people cannot break out of the cycle because it has so much of a grip.

When compiling the report, we recognised that the main route out of poverty is work—work for those who can, security for those who cannot. When the Select Committee was formed in 1997, we examined the new deal for the young unemployed. The most recent figures in Aberdeen, South show that youth unemployment has fallen by 90 per cent. I found out about that from the Lobby correspondent for the Evening Express. He telephoned one morning and said that he needed a comment from me about such a drop in unemployment. Without thinking, I said, "Bloomin' 'eck, that's amazing." It was amazing. I could not believe the figure. A reduction in youth unemployment of 90 per cent. is fantastic.

However, it is not only the young, but the long-term unemployed, who are finding jobs in Aberdeen, South. When we came into government, we were told that such people would never get jobs and that they were unemployable because they had been out of work for too long. It was said that they were no longer job ready and would not be taken on. The number of long-term unemployed in Aberdeen, South has cropped by 64 per cent., which is again a huge drop. People are now in work. I hope that they are earning enough to be paying taxes. They are now contributing to society and coming out of poverty.

I am glad that the national minimum wage will increase to £4.10 in October this year. Like many, I was desperate for provision for a national minimum wage to be on the statute books. I was disappointed that it was only £3.60, but I was aware that putting it into law was the first stage. We had to prove that it would not lead to unemployment or destabilisation of the economy.

I am glad that the Low Pay Commission recommended that the national minimum wage should increase in line not with inflation, but with earnings. The rate of £4.10 will make a huge difference to my constituents. At first, I thought that the minimum wage would not affect Aberdeen, South, it being an affluent area. I then discovered that the second highest number of people in any one constituency in Scotland who benefit from the minimum wage lived in Aberdeen, South. That was a puzzle, until I worked out that it was because people were in work and because we have a large sector that services the oil industry. Many women are in low-paid cleaning jobs or service jobs or are working in pubs. The minimum wage affects areas with low unemployment more than areas with high unemployment, because a person who is not in work cannot benefit from the minimum wage. My constituency has benefited from the minimum wage and I am sure that it will continue to do so.

If one adds such policies to the raft of social inclusion policies that the Government have introduced, we begin to see a difference. In the first two years of the Government's term—when we embarked on the report—such changes were not seen. Legislation was being passed in Westminster, but the effects on our communities were not seen. Four years after the election, people on the ground are noticing the policies' effects. Policies such as early intervention and the provision of money from the new opportunities fund have improved schools, and that extra funding is beginning to break the cycle of poverty and lack of opportunity for many children in my constituency. There is a different atmosphere in many of the schools that were beleaguered before 1997 and a new sense of optimism. The McCrone report and the McCrone settlement for Scottish teachers have also helped. Schools that were struggling now feel that they can play their part in ending the cycle of poverty and deprivation.

The Government were right to begin with children, and my hon. Friend the Member for Paisley, North was right to say that the Government's emphasis on children has lifted 1.2 million children out of poverty since 1997. I was interested to note that the Government claimed to have lifted only 1 million children out of poverty until the figures of the Child Poverty Action Group were published a few weeks ago, which told us that we were doing better than we had thought and that the figure was 1.2 million. Children are being looked after.

At the other end of the scale are people who cannot work because they are beyond working age. The Government have helped pensioners. Our report was slightly critical of the Government's action for pensioners. However, with the increases in the basic state pension and the minimum income guarantee, most pensioners—certainly pensioners who claim everything to which they are entitled—should be coming out of poverty. I accept the comments made by the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) that we have much to do to ensure that pensioners claim what they are entitled to: it is not charity, but their entitlement. Anything that can be done to simplify the bureaucracy, administration and form filling of the claiming process should be done, and the helpline has assisted pensioners in dealing with such processes.

The hon. Member for Angus said that there should be a measure of poverty based on need; we should calculate how much money people require to live, and ensure that they have that amount. I contend that the minimum income guarantee does that. A person who works in the citizens advice bureau in Aberdeen compiled some figures for me. He examined the benefits that a pensioner couple on the minimum income guarantee receive. Such a couple would claim housing benefit, a council tax rebate and the £200 winter fuel allowance. They would also probably be exempt from tax and national insurance, and would not pay into a pension scheme. If one compares such a couple with a person in work, their disposable income is equivalent to that of a person who earns £16,000 a year. That is a stunning figure, and the hon. Member for West Aberdeenshire and Kincardine would agree that it is a reasonable amount based on need. The minimum income guarantee has delivered that to our pensioners. Clearly, people who are in work have to pay for things such as travel to work, taxes and national insurance which pensioners do not.

On top of the minimum income guarantee, there is a proposal to introduce a pension credit. During the recess last summer, I spoke to most of the pensioner groups in my constituency. They felt that it was not just pensioners living in absolute poverty who needed to be helped, but those living just above the minimum level. The pension credit should certainly achieve that. The comments of the chairman of the pensioners group in Aberdeen who was quoted in the local Aberdeen newspaper a couple of weeks ago, that the pension credit would affect only a few pensioners, were simply not true. It will affect 3 million pensioners, or perhaps 5 million—I have forgotten. The number of pensioners who will be better off in 2003, when the new pension credit will be introduced, is not inconsequential. I have spoken for longer about that than I had intended.

Disabled people, or people with disabilities, probably suffer more poverty than any other group in society. The statistics prove that such people are less likely to be in work and more likely to be dependent on benefits. They are more likely to be living in poverty than any other group in society. As a result of a constituent raising the issue with me, I have recently become concerned about the disincentives in the current system that do not encourage disabled people to get back into work, and about one of the problems in relation to therapeutic earnings. One reason why disabled people do not always want to take a job is that they are frightened that, if they cannot manage the job, they will begin to lose their benefits. The Government made that less likely by allowing a year's grace: if a disabled person's work placement fell through, he failed to carry on the work or the job became too much, and the period of work had been less than 12 months, he was able to return to his previous level of benefit. That was welcomed.

However, many such people want to work many fewer hours. They might not want to go back into full-time work or even do 16 hours of work a week, which would allow them to qualify for the new disabled person's tax credit. They might want to do only a few hours of work to see how they managed. They would therefore have to qualify for therapeutic earnings, which would give them some money and would not mean that they lost incapacity benefit. However, I learned from the example of my constituent that the process was unnecessarily bureaucratic and difficult. Everything had to be done in the right order: people had to get their doctor's permission before going to the Benefits Agency and before going into work. If they did not do it in that order, they lost their benefits. That is exactly what happened to my constituent, who experienced two months of absolute hell while she tried to get her benefits restored.

I am pleased to say that my constituent's benefits have been restored, and that she is still doing a couple of hours of work a week. However, it was a horrible experience. I have subsequently been in touch with my hon. Friend the Under-Secretary of State for Social Security, and I am pleased to announce the answer that was given to a parliamentary question that I tabled today. Changes are to be made to the way in which the therapeutic earnings rule operates. From April 2002, the therapeutic work rule will be withdrawn. People will not have to prove that work will be therapeutic. Someone who is on incapacity benefit or severe disablement allowance and who wants to do less than 16 hours of work a week will be able to earn up to £60.50 without losing incapacity benefit

That will make a huge difference to those who fell between stools in terms of the therapeutic earnings rule. Such people had to prove that the work in question would be benefit the condition for which they received incapacity benefit Therefore, work would not be therapeutic for someone who had a chronic progressive disease. It might be psychologically therapeutic, but it would not meet the criteria set out.

I am sure that the change will make a huge difference and remove one of the blocks to helping disabled people get into work. They will receive £60.50 for only a year, but in that year they will be able to find out whether they want to work more than 16 hours, which would mean that they would qualify for other benefits or earn enough to live comfortably. If they cannot manage to do so, they can move back and continue to be able to earn the amount that they can earn at present, £20 a week. The amount is being increased from £15 to £20 a week. Disabled people will no longer have to go to their doctor to prove that the work is therapeutic. They will be able to earn that money. I have not been able to get hold of my constituent to let her know about that, but I am sure that she will welcome it.

4 pm

Sitting suspended for a Division in the House.

4.15 pm

On resuming

Miss Begg

I was about to finish my speech before the suspension in any case, so I shall draw my remarks to a close. There is still a long way to go before poverty in Scotland is brought to an end, but to say that is not to underestimate the Government's achievements. I hope that the Committee's report has gone some way towards influencing the Government to ensure that poverty remains at the top of their agenda. There is no doubt that we are moving in the right direction for the first time in well over a generation and, given a second term, the Government can build on the excellent work that they have begun. It is essential that we continue to tackle the scourge of poverty, because eventually we must make it a thing of the past.

4.16 pm
Mr. Bill Tynan (Hamilton,South)

I thank you, Mr. Stevenson, for the opportunity to participate, and I begin by congratulating my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) on securing this important debate. He made the wonderful suggestion that we should have a good news week, and I can list the things that I would mention in that regard. Certainly, I am exceptionally proud of the Hamilton water palace, and the new museum in Hamilton with its specific area for the Cameronians is most welcome. We also have a wonderful new shopping centre that I am delighted with, particularly as I can take some credit for it during the general election campaign.

It is particularly important that we provide sports facilities for young people, especially those who may turn to drugs and under-age drinking. If such facilities enable them to move away from damaging peer groups, we will make real progress.

I did not join the Select Committee until after the Hamilton, South by-election, so it had already begun its work. I discovered that its members worked together positively in their meetings, and in a way that differed from my expectation. However, back at the ranch—in debates such as this—the situation is rather different. If the poor had listened to the part of today's debate in which we tried to score points off each other, they might well have been horrified. It would be wonderful if we could concentrate our efforts on ensuring that the poor benefit from our expertise and see the positive, rather than negative, aspects of political parties.

I should like to raise a number of issues, including credit unions. We took evidence from the new credit union in Blantyre, which has 2,000 members, and the Hamilton credit union. Credit unions provide an opportunity for the poor to escape those who exploit them. Such people offer money at huge rates of interest, which makes it very difficult ever to escape their clutches. Often, the way to pay them off turns out to be selling drugs, so I certainly support credit unions. Last week, the Scottish Executive set aside £1.5 million to that end. That is a very positive stop, and should be considered in the light of what we in the Westminster Parliament are doing.

Mr. Welsh

The corporate body of the Scottish Parliament, of which I am a Member, supported an initiative from Members of the Scottish Parliament to set up a credit union linked with the Parliament. I am happy to see that the hon. Gentleman's ideas are being put into practice, and I hope that credit unions will flourish and achieve a great deal for the people who join them.

Mr. Tynan

I concur with everything that the hon. Gentleman said. The research showed that credit unions gave people in the community the opportunity to look after and govern themselves. Credit unions are able to go to people who fall into debt and say, "If you need help, we are part of the community, and good practice operates."

During my time in Parliament, I have paid close attention to the continuing debate about pensioners, in the course of which some of my fellow Members have expressed the belief that pensioner poverty could be tackled differently. Over the past 20 years, the gap between rich and poor pensioners has widened. The income of the richest fifth grew by 80 per cent., whereas that of the poorest rose by only 30 per cent. Clearly, the Government had to address that imbalance. During this Parliament, more than half the extra money that has been spent on tackling pensioner poverty has gone to the poorest third of pensioners. That is to be applauded. The minimum income guarantee, as a tool for the specific purpose of narrowing the gap between rich and poor, has been central to that approach.

From this April, the figures will be £92.15 for a single pensioner and £146 for a couple. From 2003, those figures will be £100 and £154 respectively. I sincerely believe that we will be able to deliver that, because when the election comes we will manage to secure another large majority. I know that that is making a difference in my constituency, where 2,000 people are better off. However, take-up is a key issue. The Department of Social Security estimates that 500,000 people are not receiving this benefit and that between 21 per cent. and 32 per cent. of pensioners who are entitled to income support do not claim it. We must consider how best to reach those people, because that will make a real difference.

Every hon. Member has the opportunity to encourage people to take up the minimum income guarantee, regardless of how they feel about it. The Government's major publicity campaign has been one instrument in achieving take-up. However, the detailed claim forms are an obstacle, and the Minister must recognise that the best way forward is to make it much easier for people to claim. With regard to the phone line, someone on the phone is a faceless person, and having to give personal details in such circumstances often deters pensioners from making a claim.

The Scottish Pensioners Forum has spoken of the need for more pensioner advice centres. Such centres could have a larger remit than simply helping people to fill in forms. For example, they could be in well-publicised locations such as supermarkets or community centres, or arrange home visits to disabled people. About 18 months ago, South Lanarkshire council decided that it would contact every pensioner in South Lanarkshire, and targeted areas such as East Kilbride, Clydesdale and Hamilton, South. About 400 people in East Kilbride who were entitled to benefits had not claimed them. That initiative provided the opportunity to reach the people whom we do not normally reach, for whatever reason. Home visits and the establishment of pensioner advice centres would be a step forward.

The basic state pension must remain the foundation of any future provision. I recognise that there have been many calls to restore the earnings link, and we have discussed that. However, a universal increase in pensions would create an enormous funding problem. To tackle pensioner poverty, we must accept that the poorest pensioners in society need additional support. The minimum income guarantee provides such support. Simply to restore the earnings link would mean that people such as me, who can live on a pension after retirement, would receive the same benefit as those with no pension at the poorest end of the spectrum. The Government have recognised that, and are making real progress.

The Government are right to target those in greatest need. Changes resulting from the pension credit will enable us to make some progress in convincing people that they should be saving for their old age. Those with, say, £100 of credit who are entitled to a small pension of £90 will still benefit, in that they will receive 60 per cent. of that pension. It is essential that we deal with such situations.

We need to look at the operation of the social fund. The people who apply to it are those who most need our help. The current management and distribution of the fund are not the best ways of resolving the problem of poverty. I would like the social fund to be reviewed so that money from it is available to the poorest in our society, enabling them to have a better standard of living. I do not want to mention my own background. When my hon. Friend the Member for Aberdeen, South (Miss Begg) spoke, I thought that she was describing my house. The only difference was that we burnt the doors as well.

4.27 pm
Mr. Ernie Ross (Dundee, West)

I am not, and never have been, a member of the Select Committee on Scottish Affairs, but I chair the all-party poverty group. I was partly responsible for establishing the group after the international UN year on poverty. All the Governments that signed up to that year had to demonstrate how they were going to tackle poverty, and the UK coalition against poverty was established. It approached the House in 1996–97 to ask if we were prepared to establish a group on poverty.

The group has campaigned in a rather unique way, which has been, I think, the best way to tackle poverty. The Scottish Parliament has looked at using the same method, although I do not know whether it has made a decision. I do not want to knock the Select Committee report. It is excellent, and I support it in its entirety. However, the Committee did not consider that method of tackling poverty, as I discovered when I asked its chairman about it. I will return to that later.

Hon. Members on both sides have referred to credit unions, which are important. In such a subject, we can see the best of devolved government, with the Westminister and Scottish Parliaments working hand in hand. Financial services is not a devolved matter. The consultation period on document CP77 ends tomorrow—23 March—so some comments made today might become part of the consultation process. The document sets out the strategy for a new form of credit union and new regulations for credit unions. Last week, the Scottish Minister for Social Justice, Jackie Baillie, and my right hon. Friend the Secretary of State for Scotland made an announcement, followed by a debate in the Scottish Parliament, that £1.5 million will be made available to the credit union movement in Scotland.

That money will be used to develop the sustainability of credit unions and to increase their membership from 120,000 people to 5 per cent. of those involved in Scotland. It is also to be used to increase the number and skills of volunteers, to bring about a change in public attitudes and to assist all credit unions to meet the new regulatory framework. Credit unions themselves will be able to access the money, although I know that they have concerns. From talking to my hon. Friend the Economic Secretary, who has responsibility for credit unions, I know that their concerns are being heard. Eight roadshows on the consultation document have been held throughout the UK.

4.31 pm

Sitting suspended for a Division in the House.

4.43 pm

On resuming

Mr. Ross

I was saying that the Scottish Executive, working with the Westminster Government—that is how we envisaged devolution working—announced a £1.5 million action plan to help the credit union movement in Scotland. That was followed by a debate in the Scottish Parliament during which a document entitled "Unlocking the Potential: An Action Plan for the Credit Union Movement in Scotland" was launched. I recommend that all hon. Members obtain a copy of that marvellous document, which, unusually for an Executive document, not only sets objectives and targets, but identifies exactly who will be responsible for delivering them. That is an example of the new Parliament in Scotland doing something different and being held to account, which is to be welcomed.

Last Saturday, I went to a meeting of my local credit unions, which are worried about the consultation process because they believe that their concerns are not being heard. I took the opportunity to reassure them, because my hon. Friend the Economic Secretary to the Treasury has said that she has listened to those concerns. My local credit unions are also worried about the proposals for capital requirements and liquidity of assets—a subject that was raised at every credit union roadshow. The fear that they might have to hold 20 per cent. of their assets at all times has been listened to. I believe that, when the consultation has finished, there will be good news for my colleagues in the credit union movement.

Many credit unions fear that they will not be ready for the switch-over on 1 July 2002. The Treasury understands that and Shaun Munday of the Financial Services Authority, who will be responsible for the new regulation, made a speech in Blackpool two weeks ago during which he stated clearly that time will be given to credit unions to sort themselves out. They will be able to take advantage of the £1.5 million that has been given to the credit union movement in Scotland and sort out some of their problems.

Another anxiety is that regulation and registration will cost thousands of pounds. It would be ridiculous to ask small credit unions for such a sum. I have the impression that the sum will be much reduced to the low hundreds of pounds if any contribution is asked for.

The Scottish Parliament introduced the document in response to concerns expressed by Members of the Scottish Parliament and the credit union movement. It will be welcomed and I commend it to my colleagues. I am the chair of the all-party poverty group. If there is a weakness in the document, it is the lack of a recommendation to involve directly the people living in poverty and to hear their voices. During the past four years, Secretaries of State and Ministers of State responsible for dealing with social exclusion have come to this Room to meet people who are living in poverty. Three weeks ago, before he delivered his Budget statement, my right hon. Friend the Chancellor of the Exchequer spoke directly to people who are living in poverty. Last night, my hon. Friend the Financial Secretary to the Treasury spoke to them about tax credits and other credits.

If Members of the Scottish Parliament want to deal with poverty, they must involve those who live in poverty. They must find a mechanism by which to hear them and enable them to talk directly to Members of Parliament, civil servants and Ministers in the Scottish Parliament. That was the recommendation of the recent "Voices for Change" conference. Young people from Scotland said, "We want our voices to be heard; we are more than just a postcode." One weakness of the document is that it does not demand that we identify and directly involve people living in poverty, or allow them to demonstrate the effect of the policy and suggest how it could be improved.

I have been pleased to be able to participate in the debate and I should like to apologise to you, Mr. Stevenson, and to the Minister, because I must slip out to go to another meeting. I will not be able to hear the response of the Minister, who spoke a bout the issue only a few weeks ago in Dundee. He spoke about it in the global context rather than the local context, which the Chairman of the Scottish Affairs Committee mentioned at the time. The report is a marvellous document and has my wholehearted support.

4.50 pm
Mr. Russell Brown (Dumfries)

I am delighted to be able to take part in the debate, although I apologise to hon. Members for being absent for most of it. I suspect that they will understand my constituency pressures and that, like my hon. Friend the Member for Dundee, West (Mr. Ross), I must dash off soon after my contribution. I apologise to the Minister if I am not present to hear his comments.

I joined the Scottish Affairs Committee in late November 1999 and it has been a pleasure to be part of the inquiry. I was somewhat thrown in at the deep end, but I learned to swim—against the tide on some occasions, I admit. I give credit to all Committee members and particularly to my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall), who led the Committee so well during the inquiry. I was pleased that we were able to get out and about to different areas and see what was happening on the ground. This afternoon, hon. Members have mentioned the many elements that feed into the package of recommendations, such as health, housing, the environment and benefits—everything connected to poverty. However, I will limit my comments to only a few aspects of the report.

First, I wish to mention the national minimum wage. I come from a part of Scotland that was described as the area with the lowest-paid—sometimes the second lowest-paid—people in Scotland The national minimum wage has made a significant difference to individuals and the local economy. Nearly £1 million has been injected into the economy of Dumfries. If we give £1 million to people on low pay they will spend it and, in turn, that can create jobs. That has happened in the Dumfries area, and unemployment has fallen. The old saying that, "Money is made round to go round" is true in that case.

On the evening that the Low Pay Commission announced the level of the minimum wage, I was knocking on doors in Lockerbie. A man nearly tore the hand off me, asking, "How much will the minimum wage be? Will you explain it to me?" He was a forestry worker who worked 52 hours per week with top-line pay of £112. Forestry work is heavy, dirty and dangerous work and yet, at the end of the 20th century, someone was still receiving such poor remuneration for it. He was delighted with the national minimum wage and I am sure that his life is now somewhat better. However, that was only the start of lifting people out of poverty. Linking the national minimum wage with the working families tax credit boosted families in particular.

I come from a rural area and was delighted that the Committee visited my constituency to get a feel for what is happening on the ground. When people discuss rural Scotland, they normally think of the Highlands and Islands and nowhere else. Members of the Committee know that the reality is somewhat different and it is good that we got a flavour of other areas. As the report states, problems of rural poverty are easily overlooked. Rural poverty is no different from poverty in cities; poverty and affluence live side by side. There is a mythical view that country life is vastly different from what we here know it to be. Poverty exists in rural areas, which are not bright and shiny for people who are trapped there.

Life in rural areas is hard for many people. There is the compensation of the quality of life that people can experience, which is fine for those who move into a rural locality and begin to enjoy a different life style. My hon. Friend the Member for Shettleston mentioned that we paid a short visit to Finland and it was interesting to see what was happening there. We recognised during our visit that structural changes in farming and their human repercussions are not only a Scottish problem. It was interesting to see that the way in which things were restructured in Finland led to the loss of 30,000 farms.

Who knows what we shall see at the end of the current UK crisis? Clearly there will be fewer farms in the UK and in my constituency in particular. Some farmers may take the opportunity to opt out of their current means of earning a livelihood because it brings them a great deal of pain.

I spoke to someone today who has worked on a farm for 26 years. The farmer, who has lost his stock, does not want to return to the dairy side of the business. The farm worker is now surplus to requirements, but he did not seem downhearted when I spoke to him on the telephone this morning. He said, "All I want is a job. I want an opportunity to restart my life." He will get that because he has the right attitude, despite his difficult situation. The difficulty is that I cannot convince the local authority that he is a special case who should be quickly rehoused because he is about to lose his tied accommodation. We cannot help people through life if we are unsympathetic and do not listen to their difficulties. This is an extreme situation and I am disappointed when people cannot help. Unemployment could lead to a serious poverty trap.

As if poverty were not bad enough, the struggle of day-to-day living and surviving increases the opportunity for individuals, families and communities to become heavily indebted. The report gives an example from Glasgow where one company clearly operates to the disadvantage of poor people. The example was of a £500 loan that would generate £310 of interest, which is scandalous. We heard about credit unions this afternoon. The same loan taken out with Cranhill credit union would have shown an interest of £18.60.

My hon. Friends the Members for Dundee, West and for Hamilton, South (Mr. Tynan) were exactly right when they discussed credit unions. The Scottish Executive must be praised for its action plan, elements of which offer real potential. We need to examine the social fund and how it operates. A plea was made to us during the inquiry about handing its operation to credit unions to get more value for money. There is a big question mark against that, but we must think seriously about how others can deal with poverty and use the finite resources better.

I am also worried about the way in which banks create problems for people. I have personal experience from constituency work. One example is of an experienced, elderly chap, who had continued to do a small amount of sub-post office work—filling in at holiday times—after he retired. He borrowed some money from the bank but, in his 74th year, he suddenly fell seriously ill with cancer. The bank had no mercy, and I had to intervene to stop it putting interest on top of interest and to let the man off from that spiral of debt. That bank responded. In general, banks are ready to hand out money to vulnerable people but are quick to chase them for it to be repaid. They often have no thought of how they could assist people's desperate plight; instead, they build more problems on top of it.

Undoubtedly, people in my area will get into serious difficulties, and I have appealed to the banks to be more responsive and show more heart. I am delighted that one major bank is taking the opportunity to meet me to examine not only the problems that farmers will have, but those that will exist for small and medium-sized businesses and self-employed people who find that they have no work.

The report and the Government's response offer a lot of hope. As Opposition Members would expect, I am delighted by much of what the Government have done on the national minimum wage, working families tax credit, the new children's tax credit and the minimum income guarantee for pensioners. Much has been done but, like many of my hon. Friends, I am convinced that there is still an awful lot more to do. We have not yet addressed all aspects of poverty, or the fact that many people are depressed throughout their daily lives. However, a start has been made, and I am confident that progress will be made through a second term of Labour government.

5.2 pm

Mr. Michael Connarty (Falkirk, East)

I am not, and have never been, a member of the Select Committee on Scottish Affairs. I am a member of the European Scrutiny Committee but, like many hon. Friends, I have followed the many inquiries of the Scottish Affairs Committee since I was elected in 1992. The inquiry we have spoken about today was especially relevant and timeous, and I commend the Committee members, and particularly my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall). I know a little of his history, and he did not mention all the places in which he had lived as he wandered around during his childhood. Many of them are in my constituency: I know that he went to Larbert primary school, which, at the time, was part of the old Larbert high school. It is now all to be swept away, because we have had five new high schools planned—including the new Larbert high school—in Falkirk, East since the Government came to power. My hon. Friend had better get back there quickly if he wants to take snaps of his former stamping grounds. The Committee's inquiry was perceptive, with many excellent and well-targeted recommendations that I read with great interest. It was also effective because, from reading the Government's response to the report, it is clear that the report informed, often challenged and influenced Government policy. We are all here not just for power, but for influence, and the Government's response and shifts in policy have brought them into line with the Committee's recommendations. For example, concessionary travel for all pensioners is being introduced across the United Kingdom, not just Scotland, and the tax credit for disabled persons, which was highlighted in the report, has been introduced.

I want to highlight a serious point, rather than extend the work of the Select Committee, which did a stalwart job. My hon. Friend the Member for Dundee, West (Mr. Ross) referred to credit unions. In the previous Parliament, I was appointed liaison officer with the credit unions in Scotland. It was an interesting environment in which to work. I come from a large family. My granny ran a menage, which was basically a shilling club from which many people bought school clothes and winter blankets. I remember such transactions in my grandmother's home. Credit unions have now expanded greatly, so much so that they are in the White House. I often visited one that was operated by Strathclyde regional council, and Strathclyde police also has a large credit union.

Les Stalling from the credit union in Bo'ness and Abe Anderson from Grangemouth credit union approached me because they were extremely worried about the Financial Services Authority's approach to such matters. They are anxious that the burdens placed on them will be too great for them ever to become more than just fledgling organisations. They may be overburdened and even collapse. They are not concerned about hundreds of thousands of pounds, but a couple of thousand pounds for a union with only 300 or 400 members. However, that money is the difference between being able to obtain a cheap loan for a vital household commodity or school clothes for the children and not having such items. We must ensure that we follow up such matters. I welcome the document "Unlocking the Potential". I know that members of the Scottish Affairs Committee as well as Members of the Scottish Parliament will follow such a development. I should hate it to be stifled, preventing credit unions from growing into larger organisations.

I refer now to housing benefit and council tax benefit, which were not referred to in the report, and the need to link them automatically, so that they are passported as soon as someone applies for income support. I am sure that many others share my experience of people who fall out of employment and enter poverty. They must apply for income support and often, by default or bureaucratic muddle, it is months before they realise that they are not receiving housing benefit and council tax benefit. They usually find out when they receive a letter from the local council saying that they are £300 or £400 in arrears. That has a terrible effect on those who have lost their job or fallen ill. They find that they are stuck into a new phase of life from which they have to dig their way out.

Councils say that they will not backdate or write off such debts, but take money out of people's social security benefits for the next "X" number of years. It is a ridiculous situation. If it were backdated, the money for which such people have applied would come into the local community, lift the burden from individual, impoverished families and, in a sense, boost the local economy. Instead of there being an infusion of cash from the national Government coffers, there is a drain on the resources of the very poor in Scotland. We must consider seriously how to link such matters and ensure that they are passported and backdated to the date of income support application.

The recommendations in the report on working families tax credit have been discussed by my hon. Friend the Member for Hamilton, South (Mr. Tynan). Job-poor means income-poor. It is clear that the effect of the credit on the family in work is substantial. In my constituency, 1,741 people have already claimed working families tax credit, which means that substantial increases in the resources are available.

The citizens advice bureau network has highlighted the fact that there are some serious problems with the way in which working families tax credit works. The first problem is that it is paid through an employer. I am not saying that employers are slow because they do not want to do the work, but they do not complete the paperwork quickly enough, which causes difficulties. People who should quickly be better off find that when they are working, they are worse off. Working families tax credit should be paid directly through the Inland Revenue, which would speed matters up considerably.

Another problem is that some people claim for child care, which is fundamental to getting families back into work. However, they have to make the claim for child care when they claim working families tax credit. Often, people get a job, claim working families tax credit and then make a permanent arrangement for child care. However, the claim cannot be backdated. Those affected must find the extra money until they get the child care element of working families tax credit. The claim for child care should be permitted at any stage of a working families tax credit application. That would be a substantial improvement.

The CAB has found that there is still a problem with the accuracy of information provided by the various tax credit offices. New deal advisers often fail to give people the correct information. The CAB suggests improving the training of those giving advice, so that they deliver one clear message.

People who receive the £70 working families tax credit should qualify for the same help as those who have means-tested benefits, because once a certain level is reached, they can no longer gain means-tested benefits assistance and end up no better off than when they started. I hope that will be taken on board when people examine the question of poverty.

On pensioner poverty, recommendation (w) about income adequacy has been mentioned. We must get a real measure of what is an adequate income for people to live on. The Committee recommended that strongly and the Government are taking it on board. The recommendation to increase the minimum income guarantee is an excellent one. In my constituency, 2,300 pensioners now have a vastly improved standard of living because of the MIG.

The link to earnings in recommendation (r) was dealt with by my hon. Friend the Member for Hamilton, South. If we have the resources, we should use them to the best effect at the earliest possible moment. We must continue as we have done. Strangely enough, that was recognised in today's early-day motion 2, which states that the uprating in April for the first time in over 25 years, will exceed the percentage increases in both prices and average earnings Those whom we could call the usual suspects admit in the first part of that early-day motion that the increase is higher than if it had been linked with earnings.

A pensioner who received £84—the basic pension with a small addition—wrote to me to complain that his friend received the minimum income guarantee last year, which amounted to £78. That was all right, because he was receiving £84. However, this year, the friend was getting £92.50 and he was feeling aggrieved because he was receiving only £84. Of course, having only £84 means that he is eligible for the MIG. There is clearly a problem out there. People are wondering what they should be claiming and how they should go about it.

I commend the work of my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) who is working with the churches in his constituency. Each church in his constituency has given a leaflet to every single parishioner, pensioner or not, and said, "If you're not a pensioner, give this to a pensioner relative or take it up with a pensioner friend," to increase the number of claimants. We could all use that network to bring everyone in. If we increase uptake, we will get the improvement that will greatly affect the level of poverty in Scotland.

I hope that the Committee does not see this as the last stage in its work. We now have a Scottish Parliament that will achieve many good things in partnership at a Scottish level and in a different way. However, the fundamental responsibility of the Government is to get the economy working right. In our last manifesto, we pledged that we would ensure that pensioners share in the increased prosperity. I hope that that pledge applies to everyone who is living in poverty. It is the responsibility of this Parliament to redistribute the resources of the UK to such people. I hope that the Labour party will be returned to government at each of the next two or three general elections. If that is the case, I predict that the economy will improve, and I believe that everyone in Scotland, and in the rest of the UK, should share in the increased wealth.

5.15 pm
Mrs. Eleanor Laing (Epping Forest)

I am pleased that today's debate is taking place. It is ludicrous and undemocratic to suggest that the Scottish Affairs Committee should be disbanded. The debate has shown that Scotland is relevant to Westminster and that Westminster is relevant to Scotland. That is an important point, and it has also been highlighted by the Committee's excellent report, which is very detailed.

I commend the Committee for its work and, in particular, I congratulate the hon. Member for Glasgow, Shettleston (Mr. Marshall) on his commitment to the report and the subject that it addresses, and on his excellent presentation at the beginning of the debate. My hon. Friends the Members for Hexham (Mr. Atkinson) and for New Forest, West (Mr. Swayne) have felt honoured to be members of the Scottish Affairs Committee, and they both apologise for the fact that they are unable to be present.

Mr. David Marshall

They have been good members.

Mrs. Laing

When the Select Committee Chairman says that my hon. Friends have been good members, I understand his meaning.

I am impressed by the way in which the Committee has gathered its evidence. It has not imperiously summoned people to Westminster. Its members have gone out and spoken to the people when they purport to represent, which means that the people are better represented.

I wish to point to a contrast. Other Select Committees enjoy travelling to California or Australia to gather evidence, or to other places with an agreeable climate. I am not criticising that, but the Scottish Affairs Committee evidently believes, as I do, that far more of life is to be seen in Glasgow than in most other places in the world—although I concede that the climate is bad, and nothing can be done to improve it.

I also agree with the hon. Member for Shettleston about the outside world's perception of Glasgow. On occasions, it is ridiculous. He offered an excellent list of some of Glasgow's good points; he stated that Glasgow is looking forward, and that the west of Scotland is at the forefront of many innovations affecting every aspect of modern life.

It annoys me when Londoners who visit Glasgow are surprised that there are trees in the city. They tell me that they were unaware that Glasgow has parks. They consider that the main reason why anyone would want to visit Glasgow is to view the Burrell collection. That is fine, but it is not what Glasgow is about, and neither is it what the people who make up the many communities in Scotland are about. However, I felt sympathy for a group of people who flew from London last summer to visit me in Glasgow. They telephoned from the airport to tell me that as the plane was coming in to land, they looked out of the window and were surprised to see that Glasgow was close to the sea, and had beautiful beaches. I asked them where they were.

Mr. Foulkes


Mrs. Laing

The Minister is correct. It is apparent that he is proud of his constituency. However, to return to my story, Prestwick airport is referred to as Glasgow on the internet. That is why my guests thought that they were flying into Glasgow. I hope that the Minister will accept my anecdote in the spirit that it is offered; I wish to be nice about his constituency. Prestwick is a wonderful place. Immediately after they landed, my guests boarded a train to Glasgow.

As the hon. Member for Shettleston said, the purpose of a Select Committee is to hold Ministers to account and to make the Government sit up and take note. I sincerely hope that the report will do that.

Unsurprisingly, I take issue with the remarks of the hon. Member for Angus (Mr. Welsh) on consensus. We have been happily sitting next to each other all afternoon, but the consensus will end now. Although it is good that the report is based on consensus, we in Parliament are supposed to argue and ask questions. It is only by doing so and by disagreeing with one another that points can be fully argued out, which is how the best conclusions are arrived at. It is not possible to take the politics out of Parliament—or, at least, not out of this Parliament.

I understand the position of the hon. Member for Paisley, North (Mrs. Adams). I am sorry that she had to leave the Chamber She made a moving speech earlier. I know her constituency extremely well, and it is not easy to confront the social problems such as poverty that exist in places such as Ferguslie park. When generation after generation of people suffers the same deprivation and every experiment fails, it is difficult to deal with. The hon. Lady has herself acted courageously in her work on drugs.

The hon. Lady spoke about her grandfather and the real poverty and working conditions of the previous century. I could tell a similar tale about my antecedents. In listening to her, I realised how grateful I was to both of my grandfathers, neither of whom accepted the position to which they were born. They learned a trade, worked hard and did the best they could for their families. However, that does not change the fact that the goal of us all is to do something about the pockets of poverty that we find in every part of the country. We are all here because we want to improve our society; the question is how to do so. If I disagree with some of the comments made this afternoon and some of the report's recommendations, it is because I disagree not with the goal but with the method of achieving it.

I agree with the hon. Member for Paisley, North that a person's start in life means so much, and that is why educational opportunity is everything. No matter which type of home a child is born into, if that child is given the opportunity to broaden his horizons by receiving a good education and being encouraged to make the best of his educational opportunities, that is the best that a society can give the child. However, I agree with the hon. Lady that if a child is properly to benefit from the educational opportunities available, his home life must back that up.

I also agree with many of the comments of the hon. Member for Aberdeen, South (Miss Begg). Poverty is not absolute. It involves a contrast; it is a relative concept. Indeed, hon. Members mentioned the Minister's previous ministerial position, in which he dealt with serious poverty in the third world, which makes poverty in the United Kingdom seem not like poverty at all. However, that does not mean that it is not poverty, because poverty is a relative concept. The hon. Lady was beginning to make me feel that I had been deprived as a child. We did not have a fridge or central heating and we had only a small black-and-white television, but it did not feel like deprivation, because no one was different. That was normal.

The pressures on families now are much greater. Perhaps it is a function of increased affluence that there is a contrasting increase in poverty.

Sir Robert Smith

If the hon. Lady wants to end consensus or feels the need for a debate—she mentioned increased affluence and the fundamental importance of education—does she not believe that when there is a choice between tax cuts and investment in education, an affluent society should choose to invest in education?

Mrs. Laing

That is a very good question, and I am glad to see that the consensus has gone.

We should not have to choose between tax cuts and investing in education. Proper management of the economy and proper investment in education in a way that cuts bureaucracy puts money into schools and gives teachers the chance to teach will give children the opportunities that they need for the future. [HON. MEMBERS: "Come over to us."] It might be more comfortable here. I remember my allusions yesterday to Bannockburn. I prefer my splendid isolation.

The point is that a properly managed economy allows both investment in education and tax cuts, which allow people a choice on how to spend their earnings and thereby boost the economy. Both can be achieved if the Government manage the economy properly. However, I appreciate that the Liberal Democrat party does not understand that. That's fair enough.

In the spirit consensus I, was going to agree once again with Government Members, including the hon. Member for Hamilton, South (Mr. Tynan), who spoke about credit unions, as did many other hon. Members. Surely, that contrast that I mentioned between affluence and poverty puts pressure on families to spend more money and, therefore, to borrow more money and get into that dreadful spiral of debt. Society today is very materialistic because of advertising, commercial attitudes and information of an advertising nature, all of which put pressure on people. Some of the ideas in the report about the development of credit unions are highly commendable, and I hope that the Government pay attention to them.

As the hon. Member for Shettleston said, the main reason for a debate such as this is to hold the Government to account. They certainly should be held to account for their lack of achievement in relieving poverty. I say that with all due respect to the Minister who is with us this afternoon. He has been in his post for only a short time, but I am sure that over the next half hour he will give us some hope and ideas as to how he will tackle the problems. However, some of his predecessors have not done so. Their rhetoric is good, but talk about what a Government want to achieve is no more than a wish list if it is not backed up by action.

I wish to make three short points about the way in which the Government have dealt with the problems of poverty and the problems that they have created through their policies: first, there are too many small, unco-ordinated initiatives; secondly, there are too many targets; and, thirdly, the benefits system is too complicated—many other hon. Members made that point. I have a list of 12 initiatives. I will not read them out, as everyone knows what they are: health action zones, sure start trailblazers—they all have interesting names—the healthy schools initiative, sport action zones and so on. They all have good spinnable names, but the fact is that all those little initiatives—

Mr. Welsh

Will the hon. Lady give way?

Mrs. Laing

I am sorry; I do not have time and I do not want to encourage consensus.

Those little initiatives are decent attempts to bring remedies to the problem. They do not, however, attack the underlying problem itself. The underlying problem can be dealt with only by providing educational opportunities, good health care and employment opportunities, to which the report alludes. If the society in which we live is not based on those three fundamentals, all the frothy little ideas in glossy brochures simply will not work.

My second point is about targets. I know that the Government are fond of targets, and I am not criticising the report in that respect. However, I may be more free to criticise the Government than are Select Committee members. If there are so many targets, how can we tell what we are achieving? The Government's first annual report referred to 40 indicators of success on which the Government wanted to be judged over the long term. Their second annual report on poverty referred to 43 different indicators of progress. The Select Committee report is therefore far more valuable than the reports being churned out by the Government. It is probably based on a far more general knowledge of the problem as well.

I do not need to discuss the complexities of the benefits system, about which several hon. Members have made good speeches this afternoon. The hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) introduced the subject and his comments on it are applicable throughout the country. I would not like to take an exam on the benefits system. I would not like to have to prove that I understand it, even though I try to do so. There is no reason why the systems should be so complex. There is no reason, as the hon. Member for Falkirk, East (Mr. Connarty) said, why there cannot be better interaction between one department and another. If one department makes a mistake and does not tell a person that he is getting into debt, and another department says that there is no chance of the benefit being backdated, that person has no hope of getting back on his feet again. Those who suffer most are those who do not understand how to work the system. That is sad, because people who know how to work the benefits system get the best out of it, whereas people who are in real difficulty desperately need help to find out how to obtain support.

Recommendation (c) on page 56 of the report states: We believe a cross-departmental approach to the provision of support mechanisms within the agricultural sector is required which would also necessitate a close partnership working between the Scottish Executive and the UK Government. The report was published well before the present crisis in agriculture and the countryside. The recommendations are good and I sincerely hope that the Government will pay attention to them.

The Minister has a lot of questions to answer this afternoon, so I shall conclude by saying that it has been a pleasure to examine this report and this subject. We are all trying to achieve the same goal. I hope that we shall hear from the Minister ideas for the future that will be better than some of the ideas of the past.

5.34 pm
The Minister of State, Scotland Office (Mr. George Foulkes)

Notwithstanding the most recent remarks, this has been an excellent debate. It has been enriched by the personal experiences of my hon. Friends the Member for Glasgow, Shettleston (Mr. Marshall), for Paisley, North (Mrs. Adams) and for Aberdeen, South (Miss Begg). The quality of the debate has matched the excellence of the Committee's report, and I congratulate my hon. Friend the Member for Shettleston on that. On this occasion, I do not say "my hon. Friend" merely as a matter of form. He and I entered the House together, and I know of his deep and abiding commitment to the people of Shettleston—especially the poor people—whom he represents so well.

I congratulate all the members of the Committee on their work in producing the report. I agreed with the hon. Member for Epping Forest (Mrs. Laing) about one point—some of the Committee's critics, perhaps including hon. Members who are present, might now recognise its usefulness, as demonstrated by the report that it has produced and the debate that it has engendered.

I would recommend that anyone who is interested in poverty—and there are many such people in Scotland—should read the report. It describes the problems that we face and offers helpful comments both to the Executive in Scotland and to the Government in the United Kingdom. We have taken many of the report's recommendations on board in the eight months since it was published, and I am grateful to hon. Members for recognising the progress that has been made. Like many of them, those of us in government accept that there is much more to do.

It is a particular pleasure for me to be able to respond to the debate given my previous job in the Department for International Development—to which my hon. Friend the Member for Shettleston referred—which was concerned with poverty eradication in developing countries. That gives me a particular empathy for the subject of today's debate.

The hon. Member for Angus (Mr. Welsh) repeated the quote that poverty is the biggest scar of a civilised society. However, he forgot to mention that that was said by my right hon. Friend the Member for Hamilton, North and Bellshill (Dr. Reid), the former Secretary of State for Scotland, when he gave evidence to the Committee. Even at that time, we recognised the importance of the problem and the ways in which we deal with it.

I have more time than I had yesterday to deal with the points that hon. Members raised. However, if there are any substantive points that I do not cover, I shall write to the hon. Members concerned.

We have taken a large range of measures to help to achieve poverty eradication. Several hon. Members referred to the working families tax credit, and it may be helpful if I outline some facts about it. About 108,000 families in Scotland benefit from the WFTC. The average award in Scotland was £75.25 a week, which is 23 per cent. higher than under the family credit that it replaced. It must therefore have improved the situation in relation to poverty. [Interruption.]

Mr. George Stevenson (in the Chair)

Order. Hon. Members will note that the Division Bell is ringing. Are any hon. Members going to vote? [HON. MEMBERS: "No."] I have suspended the sitting, as I am obliged to do, but we shall now, reconvene.

Mr. Foulkes

I must say that in terms of flexibility you are one of the most sensible and intelligent Chairmen I have ever served under, Mr. Stevenson.

I was talking about the working families tax credit. My right hon. Friend the Chancellor of the Exchequer announced in his Budget that the basic credit in the WFTC would be increased by £5 a week from June 2001. We have already improved the position; people are already better off, and they will be even more so from June 2001.

In addition to the Government's work on tax credits, we have introduced the biggest ever increases in child benefit. From April this year, it will increase again to £15.50 for the first child and £10.35 for subsequent children. For the first child, that is a 26 per cent. rise in real terms. I am especially surprised that the hon. Member for Epping Forest—who, given recent announcements, should know about these matters—did not acknowledge that fact. It may not mean a great deal to her, but it will make a substantial difference for people in poverty in Scotland. In fact, the increases will help some 600,000 Scottish families.

My hon. Friends the Members for Aberdeen, South and for Paisley, North raised the issue of child poverty and what was done about it in the Budget. That has been one of the significant changes since the report was produced. Yesterday, we had a debate on the impact of Government policy on families in Scotland. We have set ourselves child poverty targets, and in that respect I find the comments of the hon. Member for Epping Forest astonishing. How can one know whether one has achieved something without setting targets? That is what we did with international development, and we are doing the same with child poverty. Our aim is to halve child poverty in 10 years, with a view to abolishing it in 20. This is the first time that a Government have taken on that responsibility, and we are already making significant progress.

As a result of measures introduced in the most recent and previous Budgets, more than 1.2 million people in the United Kingdom—more than 100,000 people in Scotland—will be lifted out of poverty. By April 2001, a family with two children on half average earnings will be £3,000 a year better off as a result of measures introduced during this Parliament. A family with two children on income support will be £1,670 a year better off, and families in the bottom quintile will be £1,700 better off on average. How can Opposition Members say that people are not better off and not being pulled out of poverty by the actions of this Government?

A number of hon. Members have mentioned lone parents, and I shall talk briefly about the new deal for lone parents, which has been a remarkable success, in spite of the Jonahs who criticised it three or four years ago. More than 7,000 lone parents in Scotland, most of whom are women, have found work through the new deal. Our Green Paper on employment announced a new £100 million package to give lone parents the help that they need to return to the workplace. We believe that employment is the best way to tackle poverty, and the Select Committee recognised as much in paragraph 35 of its report, which states: The major cause of poverty in Scotland … is unemployment and premature economic inactivity". The package to help more lone parents into employment must be welcome news, but I should make one thing clear: we are not forcing lone parents into employment. All we are saying is that lone parents on benefit should attend work-based interviews to learn about the opportunities that are available.

My hon. Friend the Member for Dumfries (Mr. Brown) and others referred to the national minimum wage. Paragraph 36 of the Select Committee report makes it clear that, although employment is key, it does not necessarily provide a route out of poverty and low pay remains a problem. That is why we have tackled low pay by introducing the national minimum wage. The Government are pleased that paragraph 149 of the report states that the Select Committee regards both the working families' tax credit and the minimum wage as important weapons in the fight against poverty. The report continues: The minimum wage, as well as valuing people, also sends messages to employers about their own responsibilities. The Government believe that responsible employers value the national minimum wage, which ensures that cowboys who want to pay less than a reasonable wage cannot undercut them.

I should point out to the hon. Member for Angus that the vote on the national minimum wage took place on 10 March 1998—a year before we set up the Scottish Parliament. In other words, he was absent without leave and his excuse is not accepted.

Mr. Welsh

It is impossible to be in two places at once, and two of the Minister's hon. Friends—one of whom has returned to the Chamber—have indeed found that impossible. Members of Parliament have other business to deal with. I did not say that the vote took place in the time of the Scottish Parliament, and the Minister is trivialising the matter with this nonsense. At times, he has attended neither the Scottish Grand Committee nor Scottish Question Time. Does that mean that he does not care about the issues with which they deal? He should stop being childish and stick to the point that we are discussing.

Mr. Foulkes

I think I have touched a raw nerve. The debate in question took place during the night, when nothing else was happening. Perhaps the hon. Gentleman was in bed fast asleep. He mentioned the national minimum wage in his speech, and in my brief intervention I merely pointed out that he and his colleagues were not present to vote, so they had better keep quiet about the matter.

We have announced that the national minimum wage will be increased to £4.10 an hour from October 2001, which is good news for 120,000 Workers in Scotland. The Select Committee report noted that women are over-represented in poverty statistics. The increase in the national minimum wage especially helps women who, unfortunately, are still among the lowest paid in our society. The hon. Member for Epping Forest smiled when I made comments about the hon. Member for Angus, but she and her colleague, scaremongering as usual, said that jobs would go because of the national minimum wage. Nothing could be further from the truth. Unemployment has gone down, and the number of people working in Scotland has risen substantially.

My hon. Friend the Member for Shettleston mentioned financial exclusion, which is referred to in paragraph 86 of the Select Committee report. I, too, have had constituents in dire straits because they cannot deal with their large debts, and who have been threatened with legal action, or with the possibility of visits by representatives seeking to recover the money. At the same time, I have received letters from banks urging me to take out huge loans without any security whatsoever. I am sure that other hon. Members have also experienced that.

On behalf of the Government, I encourage banks and financial institutions to take a more responsible attitude to lending. Consumer credit and lending are totally acceptable in our society, but it is in nobody's interests for a company to lend individuals more than they can afford to pay back. The company cannot get its money back, the reputation of the financial industry might suffer, and the individuals can suffer real hardship and misery. The message must be to lend money responsibly. Potential borrowers should also act sensibly.

My hon. Friend the Minister for Competition and Consumer Affairs has set up a taskforce to explore the causes and effects of over-indebtedness and to examine ways of achieving more responsible lending and borrowing. The Government have recently announced that they will provide £1 million to fund three pilot projects for a telephone-based debt advice service. The Scottish Executive have provided further funding for one of them, in Fife.

Several hon. Members have mentioned the importance of credit unions. Paragraph 102 of the report recommends that we promote their development with full vigour. My hon. Friend the Economic Secretary has announced measures to help credit unions, such as allowing them to loan money over more flexible periods and increasing the savings limit for young people to £5,000. My hon. Friend the Member for Dundee, West (Mr. Ross) mentioned that the Secretary of State and Jackie Baillie have announced a £1.5 million action plan to expand the credit union movement in Scotland. We understand and are taking into account the practical and financial problems that credit unions face.

As a Minister in Scotland, I have been pleased to travel around and see that people have new jobs as a result of the Government's measures. Their record on tackling unemployment is first rate. It is below 1 million for the first time since 1975. In Scotland, employment is at its highest level since 1960, which is when I left university, so it was a long time ago. That is a real achievement for the Government.

We have enabled people to earn a decent income and, therefore, to find a way out of poverty. The new deal, which has been a great success, is a key factor. Since it began, 31,500 young people have found employment through it. I pay tribute to the professionalism of the Employment Service and its partners in delivering the new deal. We have taken steps to ensure that older people who wish to do so can also enter the labour market through the new deal.

Hon. Members have mentioned tax credits, and suggested that the system is too complicated. We intend to reform the tax and benefits system to tackle poverty and to overcome barriers to working. Tax credits are not a gimmick, but a way of giving targeted support to those who need it. When tackling poverty, it is important to look at wide issues, not just concentrate on one or two areas. Our reforms mean that the Inland Revenue is performing new functions: administering tax credits and enforcing the national minimum wage.

I recently met the director of the Inland Revenue in Scotland. As a result of that meeting, I am arranging for Scottish Members to be invited to a briefing session in Edinburgh, which will enable them to understand the detailed operation of the working families tax credit and the new children's tax credit. They will then be able to advise their constituents about them.

Sir Robert Smith

At that briefing, will the Inland Revenue be able to deal with the other side of the problem? We do not want to put extra burdens on employers that affect job creation. Will that briefing be able to examine ways of reducing the cost to employers of administering the working families tax credit?

Mr. Foulkes

Yes, it certainly will. I am thankful that I shall not have to deal with that today, because time is running short.

As my hon. Friend the Member for Shettleston said, I used to be the director of Age Concern Scotland, and the report examined pensioner poverty. We looked hard at the inheritance that we received and we were absolutely right to decide to tackle the problems of the poorest pensioners first. Figures from the Department of Social Security show that, during the 20 years or so to 1997, the poorest pensioners did not share in the general increase in prosperity. Society became more unequal, and the Select Committee states that the Government were right to concentrate initially on the poorest pensioners. We welcome that endorsement. We introduced the minimum income guarantee to provide support for the poorest pensioners and the Select Committee commends us for doing that. From April, the minimum income guarantee will be simplified and increased to £92.15 for a single pensioner and £140.55 for a married couple. That shows our commitment to the poorest pensioners.

Thankfully, the Department of Social Security is reducing the existing claim form from 40 pages to 10. The form will be shorter, more user friendly, easier to understand and less bureaucratic. We shall examine some of the suggestions that have been made today on other aspects of take-up and pass them to the Department of Social Security for consideration.

Pensioners have free television licences if they are over 75 and they received a winter fuel payment of £200 this year. My right hon. Friend the Secretary of State for Social Security will announce next winter's payment later this year. Fuel poverty is a problem, and I was privileged to launch the Government's fuel poverty strategy with Jackie Baillie of the Scottish Executive. I commend what the Scottish Executive are doing in providing £350 million for installation of free central heating in all pensioners' homes. That huge step forward was never envisaged by the previous Government, but 130,000 households will benefit.

The Select Committee argued that the level of state retirement pension should be linked to national average earnings, but that would not help the poorest people so much. Next year, the Government will spend an extra £4.5 billion on pensioners, and when tax and benefit reforms are considered together, almost all pensioner households will be better off in April 2001, compared with April 1997, than they would have been with an earnings link in the basic state pension. We have done better than if there had been an earnings link. The pension credit is on its way and people who save will not be penalised for that. It is the first time that we have ever done that.

Various points were raised about rural poverty, which I appreciate as a Member of Parliament for a rural constituency, and the Government have dealt with that. It was astonishing to hear the hon. Member for Angus say that this is a non-political issue when his representative in the Scottish Parliament produced a dishonest report based on out-of-date figures. The figures for child poverty, lone parents, families and pensioners are three years old. That is typical of the Scottish National party's dishonest approach to politics. It dare not admit that Labour's policies are working and benefiting people, so it fiddles the figures. The facts are that, since spring 1997, the number of children living in households with no one in work has fallen by 300,000 in the United Kingdom and by more than 30,000 in Scotland. The Labour Government have introduced measures to lift more than 1 million children in the United Kingdom and more than 100,000 in Scotland out of poverty. In Scotland more than 100,000 more people are in work now than in 1997. With the minimum income guarantee, 200,000 of Scotland's poorest pensioners will be £800 a year better off in real terms from next month.

It is dishonest to drag up three-year-old statistics when everyone knows that it has been in the past three years, and particularly in the past few months, that the full impact of Labour's help for the poorest has been felt—even more will be achieved in the coming months. We do not need statistics to prove that fact because we have the evidence of our eyes and ears: more people are at work; those at work are paid more because of the minimum wage; and, because of the £200 winter fuel allowance, pensioners no longer need to choose between heating and eating.

It is typical that the Scottish National party should try to use the poor for party political gain. However, the people of Scotland will never forget the Scottish nationalists' common cause with Thatcher in 1979, which gave us 18 years of a Tory Government who attacked and undermined the poor of Scotland. As we have heard today, the Scottish National party is making common cause with the Tories again to undermine Labour's achievements. Only through a partnership between a Labour Government at Westminster and the Scottish Parliament can we deliver the social justice that Scotland has sought for generations. The Scottish nationalists either will not or cannot understand the need for that partnership.

I hope that you enjoyed those remarks, Mr. Stevenson. I know that the hon. Member for Angus did not. We are a forward-looking Government and there are so many examples of that that I wish I had more time to describe them: the new pension credit, the introduction of tax credits to integrate the various support systems, the new deal. We are a thoughtful Government who are addressing the problem of poverty. We are a visionary Government: consider the commitments and targets that we have set to end child poverty. We are a caring Government who do not deny that problems exist, but who believe that only Labour in partnership with the Scottish Executive can achieve progress in areas such as fuel poverty. We are committed to radical actions and measures such as the working families tax credit, the national minimum wage and the minimum income guarantee, which will benefit Scottish pensioners. Unlike the hon. Member for Angus, I wrote these words; I noticed that he was reading from a prepared statement.

No one who knows modern Scotland and sees what is happening there can deny that we inherited an appalling legacy and have recognised the challenges that poverty brings. We have taken action to deal with those challenges: we have ensured that social and economic progress work hand in hand. There is no division between social and economic policy. We run a successful economy and that is how we are able to tackle poverty. I commend the Government's record on tackling poverty and welcome the Scottish Affairs Committee report, and I hope that hon. Members recognises what the Government have done to implement the report's recommendations and to tackle to poverty in Scotland and in the whole of the United Kingdom.

Question put and agreed to.

Adjourned accordingly at three minutes to Six o'clock.

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